Is shifting from Li-ion NMC to LFP in EVs beneficial for second-life storages in electricity markets?

Abstract

While electric vehicles are promising to reduce carbon emissions on the road, from a holistic life-cycle view, further environmental considerations in the production and end-of-life management of their batteries are required. Recently, circular end-of-life thinking has been promoted with strategies to increase retired batteries' lifetime through second-life as lifetime extension is typically favoured in life cycle assessment. However, standardization of these strategies toward recycling or repurposing paths is recommended for different Li-ion chemistries. This categorization mainly concerns the cobalt-containing cathode Li-ion batteries i.e., NMC which is the dominant technology for transportation, and the alternative technology i.e., LFPs with a more recent attention toward them in automobile sector due the cobalt scarcity in the supply chain. This technology shift will impact their end-of-life management at the retirement. In this arrangement, the economic priority of repurposing such battery chemistries needs quantification. This study evaluated the financial return of repurposing retired Li-ion NMC and LFP batteries for energy arbitrage applications in power systems. The feasibility of repurposing is examined in the Irish and Queensland's markets. Results show that retired Li-ion LFPs respond to price fluctuations more frequently with a higher financial return compared to NMCs; thus, they have higher potential for repurposing as such their greater integration in new vehicles is promising from a circular economy perspective. Different rates of return have been observed for various sizes of systems and battery durations. The financial benefits are more prominent for a one-hour battery in a medium system compared to half and two-hour durations and a smaller system. A sensitivity analysis shows that even spending the same capital cost as a new system for a repurposed system results in a marginal financial return in a competitive electricity market like Queensland's, whereas further incentives toward circular-enabling business models from local authorities will effectively make such investments feasible.