Case Study: Repurposed Batteries Deliver Cost-Saving Sustainability in Phoenix

Repurposing lithium batteries is transforming energy storage solutions in Phoenix, where the City has successfully implemented second-life batteries to cut costs and advance sustainability. In this case study, Max Khabur, Marketing Director at Bluewater Battery Logistics, explores how repurposed batteries support circular economy goals and drive environmental benefits.

Lithium batteries are enabling the global energy transition to electricity in many industries and are experiencing explosive growth in demand across various applications and geographies. As multiple gigawatt-hour factories launched in the last few years started to deliver new batteries at scale, a second-life battery economy emerged and is dynamically growing.

The lower price of a repurposed lithium battery pack comes with the high sustainability benefits of avoiding emissions from the energy required to produce new batteries, delayed recycling, and diverted waste. The key challenge to repurposing batteries lies in trust – in the absence of a mandatory digital battery passport, there is a lack of transparency into the first-life application of non-new batteries.

By officially approving a vendor of battery storage systems running on repurposed lithium batteries, the City of Phoenix is building trust in the second-life battery energy storage. The success of this project laid the foundation for scaling battery repurposing in electrification projects by other departments and municipalities.

Challenges: Cost of new batteries vs. used batteries

A significant rise in the production of lithium-ion batteries for electric vehicles, power storage for renewable energy generation at the utility scale, and multiple other uses, home and community solar, power tools, and electric mobility, formed a large and dynamically growing second-life battery market. Unlike earlier generations of batteries, lithium cells, and packs have a much longer useful life and change their performance over their life cycle. The drive for sustainable use of resources, the economic requirement to maximize the utilization of equipment, and the abundance of batteries suitable for second-life applications created a new second-life battery market with multiple business opportunities, supported by experts in battery repurposing and recycling, such as Bluewater Battery Logistics.

Indeed, it takes years of expertise in diverse battery applications to navigate nuanced requirements for battery performance and capabilities of battery packs of different chemistry compositions, state-of-health, capacity, etc. Thinking about reusing batteries before recycling is always a good idea, but a good business foundation is non-negotiable. Repurposed batteries must not cost more than new ones. They need to be cheaper by at least 30-40%. Having an overseas partner with lower labor costs can sometimes make or break the deal.

Cost of disassembly batteries. Courtesy of Lithium-ion battery second life: pathways, challenges and outlook; published by Frontiers in Chemistry, April 2024.

Another important calculation in repurposing vs. recycling is the price of black mass and recovered materials and the cost of extraction. For example, LFP batteries provide less output of valuable metals than NMC. They have negative recycling value, which means you have to pay to recycle them. This drives the value of repurposing end-of-life LFP cells (with at least 60% SOH) and prolonging their useful life for as long as possible. The value of recovered materials from NMC cell recycling can, in some cases, be greater than the resale value for new applications.

Winning the buyer’s trust

However, the greatest challenge in the second-life battery economy is the lack of transparency and standards. This new market requires seller validation and new trust mechanisms to reduce the cost of testing and re-certifying cells and provide a seamless flow of batteries from one application to another.

Solution: Manufacturer of energy storage becomes official Phoenix vendor

The Office of Environmental Programs at the City of Phoenix has developed the Sustainable Purchasing Policy to promote purchasing products and services that have a reduced impact on human health and the environment when compared to competing products or services that serve the same purpose while remaining fiscally responsible (starting with traditional factors, such as product price and performance).

As one of the fastest-growing cities in the nation, Phoenix's demand for resources, such as water and energy, is expected to grow considerably in the years to come. A sustainable purchasing policy allows the procurement of more sustainable products that have a reduced impact on the environment and are either made from recycled products or can easily be recycled at the end of the useful life. Through these actions, the city moves closer to meeting its 2050 Sustainability Goals while supporting a city-wide culture of sustainability.

Bluewater Battery Logistics helps battery OEMS and users to repurpose and recycle lithium forklift batteries. After testing and evaluating the batteries, end-of-life cells are sent for hydrometallurgical recycling. Cells with at least 60% SOH (more often, EV batteries are retired after they drop below 80% SOH) find new applications.

“Bluewater Battery evaluates a few variables to find the optimum way to repurpose the batteries for a second life and minimize the environmental impact,” explains Steve Feinberg, CEO at Bluewater. “We look at the condition of the cells, geographical location for minimal shipping, and our partners’ expertise to repurpose batteries.” The batteries' new lives in secondary applications depend on how they fare in tests of voltage, Ah capacity, and various state of health (SOH) parameters.

Hyster 4-wheel sit-down Class 1 Forklift. Courtesy of Bluewater Battery Logistics.

The story of one 80V 360Ah LFP forklift battery began in a Hyster E55XN Class I sit-down lift truck, operating in a packaging facility of a fruit-producing company in WA, US. Our demo battery returned with many years of life left in each cell but with no chance to be used in a new forklift battery again.

Fortunately, Bluewater found a second-life application in solar array battery storage, which was a part of the pilot project of the City of Phoenix. “Repurposed batteries are a perfect solution [for battery storage systems], cutting costs and contributing to the sustainability and our circular economy goals,” says Amanda Jordan, Circular Economy project manager for the City of Phoenix.

Jordan’s team has successfully completed a pilot project to use remanufactured lithium batteries for solar panel energy storage to power lighting in South Mountain Park in the summer of 2024. The major concern has always been the batteries’ resistance to Arizona heat, but the LFP lithium cells in energy storage for a solar array demonstrated adequate resilience and are expected to work reliably for another 10 years. “The positive outcome of this project has paved the road to the mass usage of second-life lithium cells as energy storage for the renewables (in Arizona),” Amanda commented.

Repurposed batteries help achieve one of the Circular Economy Projects’ KPIs - waste reduction. “This is a good example of a secondary stream of waste diverted from landfill, and is also a cost saving mechanism, contributing to our sustainability goals” said Phoenix Chief Sustainability officer Mark Hartman.

A city’s vendor database is a public record; it is also a network for other city managers, providing information on available and tested sustainable solutions, which are also cost-effective.

Results: Proven business case for the second-life lithium batteries

A total of 80 kWh of battery energy storage was deployed in 5 locations, including four solar sites and one emergency power backup. 1.9 tons of CO2E was saved by solar generation (compared to Arizona grid average emissions), and 13.5 tons CO2E were avoided from manufacturing of replaced new batteries.

What is more important is that the business case for the second-life battery application was proven, and a verified vendor of repurposed batteries is endorsed by the City of Phoenix based on the validity of the results and user feedback.

Solar energy storage installation site at South Mountain Park, City of Phoenix. Courtesy of Bluewater Battery Logistics

Conclusion

Energy transition, which plays a vital part in fighting climate change, is enabled in many ways by lithium battery technology. Repurposing lithium cells at the end of their useful life from their first-life application to less-demanding second-life does not just divert gigantic amounts of waste. The dynamic second-life battery market fuels the creation of new businesses. It reduces the price of solar energy ++for small rural solar plants, community solar networks, and MWh commercial and industrial site installations, further accelerating the adoption of renewables.