The Growing Potential of EV Battery Warehouses

German automotive giant Daimler AG recently announced its second project to use an EV spare parts storage facility to provide power grid balancing services. The facility has been dubbed a “live replacement parts store” for Daimler subsidiary Smart’s fleet of third generation EVs. This innovative use of spare battery packs provides two benefits for the company. First, lithium ion (Li-ion) batteries must be cycled on a regular basis to maintain optimal performance, and the operation of the facility will ensure a deliberate, battery conserving pattern of charging and discharging. Second, Daimler can generate revenue with this spare parts storage facility that would otherwise simply be a cost impetus. 

Vehicle Batteries for the Grid

Daimler built its first live storage plant in 2017 in Germany; the facility has the capacity to output 5 MW of power to the regional grid, with a total storage capacity of 17.4 MWh. For this project, the company partnered with energy retailer enercity, which is responsible for marketing the battery storage facility’s power on the German market for primary power control. 

These projects are part of a broader push to maximize the use of EV battery packs both before and after their use in vehicles. The re-deployment of used EV batteries in stationary energy storage projects is already a hot topic in the industry. Daimler is one of many automakers active in this space as well; the company operates a 13 MW facility in Germany which uses second-life batteries that have come from its own vehicles. Opportunities for second-life batteries are beginning to take shape as barriers are overcome regarding the limited availability of used vehicle batteries and the cost to repurpose them for a new application. In addition to second life opportunities, many automakers are now focused on how to both maintain and generate revenue from batteries before they are ever used in vehicles. 

Growing Possibilities

The use of spare EV batteries as an energy storage resource on the grid could provide a major source of new capacity. Vehicle manufacturers in many countries are required to maintain and provide spare parts for their vehicles by law. According to Guidehouse Insights’ 2017 report, Advanced Energy Storage for Automotive Applications, an estimated 190,000 MWh of new battery pack capacity will be required for EVs in 2019 alone. Assuming that 1% of this new capacity will be held by automakers as spare and replacement parts, this would equate to 1,900 MWh worth of batteries that require cycling to maintain readiness. This represents a massive source of stationary energy storage capacity that could be utilized for grid balancing services, peak demand reduction, and to facilitate higher penetrations of renewable energy generation. 

These live spare battery storage projects are part of a trend towards more scalable, plug and play energy storage facilities. Given the relatively short life-span of Li-ion batteries compared to other power grid systems (less than 10 years depending on usage), grid storage projects are often designed to evolve over time. These designs include extra rack space for new battery packs to offset degradation and the ability to replace poorly performing packs with new ones. Avoiding the need to entirely replace a facility as batteries degrade can help reduce the overall lifetime costs of an energy storage project. Live vehicle battery storage facilities, such as the ones built by Daimler, can help motivate the development of flexible utility-scale energy storage plants with the ability to expand over time and integrate both new and used batteries.