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

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 Liion 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.

Automated summary

While electric vehicles aim to reduce carbon emissions, additional consideration is needed for the environmental impact of battery production and end-of-life management. Circular end-of-life thinking has been promoted to extend retired batteries' lifetime, particularly for cobalt-containing cathode Li-ion batteries such as NMC and the alternative technology LFPs. This study evaluates the financial return of repurposing retired Li-ion NMC and LFP batteries for energy arbitrage applications in power systems, finding that LFP batteries have higher potential for repurposing due to their higher financial return and greater integration in new vehicles.