Falling Li-ion Battery Prices Mirror Solar PV Trends: Is There a Role for Second-Life Batteries Before Recycling?

As lithium-ion (Li-ion) battery prices continue to fall - following a trajectory eerily like that of solar photovoltaic (PV) modules over the past two decades pivotal question arises: what happens to used EV batteries before they are recycled? Could repurpose these batteries for second-life applications be a valuable stepping stone toward a circular, resilient, and cost-effective energy storage ecosystem?

Li-ion Price Decline Echoes Solar PV's Cost Curve

The energy sector is repeating a typical trend. Latest information shows Li-ion battery pack prices in 2024 are $139 per kWh and they are predicted to fall below $100 by the end of 2026. Like solar PVmodules, they have experienced dramatic cost cuts which have led to explosive growth globally. Several causes such as greater manufacturing efficiency, cost cutting with mass production, material replacement (from nickel-cobalt to LFP) and more competition in Asia, North America and Europe, are driving the decrease in Li-ion battery costs, similarly to solar PV cells. Lithium iron phosphate (LFP) is currently known as the main battery in storage systems, favoured because it is both affordable and stable at high temperatures and they are challenging traditional batteries in EV applications. While low-cost solar created a lot of useless panels, cheaper batteries might end up like that too—but second-life solutions could delay that happening.

Source: https://about.bnef.com/insights/clean-energy/lithium-ion-battery-pack-prices-hit-record-low-of-139-kwh/
https://www.pv-tech.org/irena-solar-lcoe-falls-12-year-on-year-90-since-2010/

What Factors Have Caused Solar PV Module Prices to Stabilise Since Almost 2020

1.           Market Maturity

Worldwide, the solar PV industry was operating on a huge level by 2020. Many of the simple benefits from large-scale production, better production methods and experience were already achieved. Making further cuts turned out to be ever more difficult.

2.           Cost for Material and Input

Some key materials, for example polysilicon, silver and aluminium, rarely drop below their set price floors. Though making things is now much faster, the cost of the materials plays a stronger role, and so prices see less reduction now.

3.           Supply chain and energy costs have been increasing since 2021.

Because of the COVID-19 pandemic, global supply chains were disrupted, causing both freight and material prices to climb. Energy costs rose due to international issues (like the Russia-Ukraine war) affecting productions of polysilicon, making the overall cost of solar module manufacturing increase.

4.           Quality and Efficiency can conflict with each other.

Industrialists were now concentrating on improving performance and how robust their products could be. Modules that are more efficient such as TOPCon and HJT, cost more to make, but they provide better results. Also, focusing on value more than volume makes it easier to hold prices stable.

5.           Trade barriers and policies

Import duties, anti-dumping measures and local requirements for content added new expenses in important markets such as the U.S. and EU. Because of these policies, the prices in health care services remain above what they would be without them.

6.           Environmental and ESG Questions

Manufacturers are now being pressed to produce more sustainably, ethically and using less energy and these methods often cost more. An example is low-carbon polysilicon produced using hydropower from Yunnan, China which costs more than polysilicon made with coal.

The Growing Pipeline of Retired EV Batteries

More than 80% of Li-ion battery sales in 2023 are expected to come from electric vehicles since they drive the growth of electric vehicles. People usually need to retire their EV batteries because their driving range becomes too short, and this usually happens after 8–10 years. Recycled batteries may not be well suited for electric cars any longer, but they do have 60–80% of their original capacity which is enough for stationary applications that do not need a lot of space. More and more EVs are coming onto the roads worldwide which is creating a burgeoning stockpile of used batteries. In 2030, expert estimates suggest that tens of gigawatt-hours (GWh) of used battery capacity will enter the market each year. This situation gives both difficulties and opportunities.

The Case for Second-Life Batteries

Rather than scrapping EV batteries after use, they can be recycled only after they have a second life which gives them more miles and makes solar and wind energy storage cheaper. Some examples of their application are:

•Keeping the grid stable by adjusting energy supply

• Energy storage that sits on the premises of commercial and industrial users

•Ensuring electricity access to people in rural areas and providing backup systems in those that are off the grid

•Programs that work to reduce peaks in energy use

For emerging markets where cheap energy storage is required to build sustainable grids, second-life batteries could have a major impact.

Challenges to Widespread Adoption

Getting second-life batteries into use is sometimes challenging.

•Cost Competition: As the price of new batteries gets near $100/kWh, it becomes harder for second-life batteries to price attractively. The labour and expenses involved in collecting, testing and repackaging used batteries can lower or remove any savings. There are differences in how used batteries start to lose their performance. For vehicles to be safe and operate properly, their diagnosis needs to be detailed, the guidelines must be standardised and extra monitoring at the cellular level is usually needed.

•Lawmakers in numerous places have yet to specify how second-life batteries are managed. Do these items end up as trash or are they changed into a new thing? Legal and technical aspects related to liability, safety and transportation must be set up as soon as possible.

•Not Enough Infrastructure: There is not much structure in place for collecting, analysing and reusing batteries. If infrastructure for large-scale batteries is missing, a lot of usable ones could end up being scrapped or put in landfills early.

Environmental and ESG Benefits

Recycling objects for second use is very beneficial for sustainability. If batteries are used longer before recycling, this reduces their impact, lessens e-waste and helps hold off the use of more virgin material which is important for companies aiming to meet ESG standards. Studies have found that use of EV batteries for storage reduces CO₂ emissions by up to 40% more than simply recycling them. Also, reusing modules helps save on costs which can make renewable energy projects more attractive for banks, especially if solar panels are used locally in regions with little energy.

Toward a Circular Battery Economy

We need a complete approach to maximize what second-life batteries can do.

•Using data to follow the entire lifespan of a battery

•Free software available to cheque the health of used batteries

•Having standard battery designs makes it easier to incorporate them again.

Incentives from public policies to encourage recycling and safe management. Like solar, momentum and development may soon make batteries a major part of the energy sector. Second-life applications might not be the final solution; however, they help create a more circular and equal energy world.

Conclusion

A decrease in Li-ion battery prices simplifies the business of clean energy. Still, the discussion must go beyond just how much something costs and how it’s deployed to address sustainability and the overall life of a product. When used carefully, second-life batteries can support the clean transition to an economy where batteries are fully used and then properly recycled at the end of life.