Second-life EV batteries might play standout role in satisfying booming energy demand

Yahoo

09-07-2025

SPARKS, Nev. — A little more than two years ago, JB Straubel began exploring the potential of second-life electric vehicle batteries in energy storage applications. His first test: powering a microgrid that runs the electricity at his home.
'It's a whole family experiment,' he said.
Now Straubel, CEO of battery recycling and reuse company Redwood Materials, has embarked on a more ambitious path. His company has fashioned a microgrid in the Nevada desert out of 792 repurposed EV battery packs from manufacturers including Toyota, General Motors and Volkswagen, among others.
Redwood bills this as the largest second-life battery deployment in North America. It holds 12 megawatts and 63 megawatt-hours of energy capacity, which feeds an artificial intelligence data center built on site. An adjacent solar array provides energy. Straubel said bigger projects are on the horizon.
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The size of Redwood's microgrid and the scope of the company's forthcoming plans have prompted a fresh look at the potential of repurposed EV batteries to serve as capable storage devices while an energy boom sparked by AI is underway.
AI data centers are demanding more electricity. They already claimed 4.4 percent of U.S. electricity in 2024, according to the Department of Energy, and that could jump as high as 12 percent by 2028. That means in just three years, data centers could devour as much as 580 terawatt-hours of electricity.
Energy system providers have installed a record number of energy storage systems in North America in the first half of 2025, according to Boston Consulting Group. The firm estimates that demand will grow from 52 gigawatt hours of capacity this year to 90 GWh at the end of the decade.
Second-life EV batteries are a piece of that puzzle.
'Retired EV batteries will make a dent in upcoming storage needs,' said Jessica Dunn, a scientist in the clean transportation program with the Union of Concerned Scientists.
But if a critical mass with enough remaining capacity exists, some wonder if harvesting batteries of multiple chemistries and slotting them into storage systems translates into a healthy business. They must be priced far more favorably than brand-new systems, which offer the advantage of higher reliability and less-frequent maintenance.
Historically, second life has been a dicey value proposition, said Nathan Niese, global lead for EVs and energy storage at Boston Consulting Group.
'The premise makes a ton of sense,' he said. 'What has been tricky up to this point has been getting the economics right.'
Redwood believes an inflection point has arrived. It has started a business division called Redwood Energy that's dedicated to repurposing batteries in storage applications. Its business case is buoyed by its position as a leading battery recycler, Straubel said. The company said it receives about 90 percent of all lithium ion batteries and battery materials recycled in North America.
Sheer scale is a 'compelling' part of the business case, Straubel said, that allows Redwood to provide second-life storage at low dollar-per-kilowatt-hour costs. The company expects to have more than 5 gWh of capacity over the next 12 months.
Even without such scale, others in the burgeoning second-life battery industry see favorable business conditions forming, especially as industry leaders and government officials seek domestic supply chains for battery materials.
'To really retain those strategic materials in the United States, you have to commit to reuse before recycling,' said Antoni Tong, CEO of Smartville, a San Diego battery startup that builds energy storage systems with repurposed EV batteries sourced from automakers, suppliers and fleets. 'Otherwise, the country with the lower labor costs will gobble up the materials.'
Tariffs could give America's fledgling battery repurposing industry a tailwind, Straubel said. In particular, decreased imports of lithium iron phosphate batteries from China mean growing interest in feedstock already here.
'It makes this look extremely more competitive,' he said.
But provisions in the 'Big Beautiful Bill' signed by President Donald Trump this month could introduce a countervailing effect by phasing out tax credits for wind and solar energy by the end of 2027. Battery storage is often paired with wind and solar energy sources to minimize intermittency.
Further, the removal of EV tax credits could hurt the supply of used batteries down the road.
'We'll have a slower uptake of EVs without the tax credit,' Dunn said. 'We'll probably adjust our forecast. But it's not going to stop the industry. … This transition to lower-carbon technologies is happening.'
Redwood may be the biggest mover in the battery repurposing space, but it is not the first.
'We've seen this coming for a long time,' Tong said. 'To really get the full value of circularity, you need to get the highest use of batteries before grinding them down for their material value.'
Last December, Smartville outfitted Nissan's North American headquarters in Franklin, Tenn., with a 500-KWh energy-storage system comprising used batteries from the Nissan Leaf EV.
Nissan also supplies B2U Storage Solutions, another California second-life startup, with used batteries. Among other projects, the company has operated a 3-MW, 28-MWh hybrid storage system that uses 1,300 repurposed EV batteries in Lancaster, Calif., since 2020. The system is a hybrid; it is powered by energy from the grid and a solar installation.
Element Energy opened a 53-MWh storage facility in Texas in February 2024 comprising 900 used EV batteries. It provides power to the state's grid under the Electric Reliability Council of Texas, representing about 90 percent of the electric load in Texas.
Straubel eschews grid connections, at least for now, in favor of speed. Redwood needed no permits for its installation. Grid connections, backup generators and pouring concrete may have all required permits.
Without the need for them, Redwood and Crusoe, its AI data center partner, completed the microgrid in less than five months, Straubel said.
'We built this whole thing without even needing to really go through an approval process,' he said. 'You can deploy this very fast.'
'It's a bit fortuitous that we find ourselves built in the middle of this particular datacenter Mecca.'
The likes of Apple, Google and Microsoft are all building data centers down the road from Redwood in this otherwise-barren desert environment. They would make logical targets for the company's next installation, though Straubel did not detail next steps.
'It's a bit fortuitous that we find ourselves built in the middle of this particular data-center mecca,' he said.
Whether here or in other hotspots like Texas, he is confident the company's new microgrid is a first step of many more ahead in giving EV batteries a new lease on life in energy storage.
'We'll absolutely see much larger deployments of this,' Straubel said. 'We are actively engineering and working on those projects today.'
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