Batteries have become ubiquitous in our daily lives. From mobile phones to computers to electric vehicles, the convenience of on-demand power is driving demand for batteries of all shapes and sizes. As such, significant resources are being put to work in improving battery performance and exploring new battery chemistries. However, batteries are also being made with increasingly hazardous materials that pose serious environmental risk. Lithium ion batteries, today’s most widely used type of rechargeable batteries, can release highly toxic gases if disposed of improperly.
While localized resources are available for recycling and processing small household batteries, large batteries are much harder to manage. Some battery systems for utility-scale energy storage are becoming so large that they need their own buildings for space. The increasing popularity of electric vehicles is also generating a steadily growing waste stream of large batteries. Driven by these trends, roughly 11 million metric tons of lithium ion batteries will reach the end of their service lives over the next decade, at a rate climbing to 2 million metric tons per year by 2030. As visibility into this problem becomes clearer, a key question emerges — how will we manage all that toxic waste?
The Supply Side: Energy Storage and EV Trends
With the advent and evolution of renewable energy generation technologies such as solar and wind farms, we are entering a mass adoption phase for non-fossil fuel energy generation. Utility-scale solar and wind are already cheaper than new coal plants and are even getting cost-competitive with marginal operations of existing coal plants, per Lazard’s latest Levelized Cost of Energy report. One technology that can further improve the applicability and unit economics of solar and wind energy generation is battery energy storage. As sunlight and wind are intermittent sources of energy, batteries are being embraced as tools to make solar and wind farms more reliable sources of electricity.
2019 was a turning point for utility-scale energy storage, as utilities became increasingly aggressive in their battery deployment plans for the next decade. Announcements for record-breaking battery installations have become commonplace. A recent survey of U.S. utilities from Wood Mackenzie highlights plans to deploy an aggregate 6.3 gigawatts of front-of-the-meter battery storage between now and 2029, more than five times what was planned in 2018 for the same time frame.
Behind-the-meter storage is also growing quickly, driven by regulatory support for small-scale solar installations in markets such as California and Hawaii. Even with conservative revisions over COVID-19 concerns, an estimated 430 megawatts of behind-the-meter storage is expected to be deployed in 2020, a more than 100% increase over 2018 deployments.
In a related market with even more batteries to be recycled down the road, electric vehicles are becoming increasingly popular among drivers. Though EV batteries are often significantly smaller in capacity than those of energy storage units, the sheer number of EVs being produced and sold translates to incredible volumes of batteries that will need to be disposed of within the next decade. At the end of 2019, nearly 1.5 million EVs were on the road in the U.S., with roughly a quarter-million of these sold in 2019.
Tesla has been leading the pack by a wide margin, with its vertically integrated battery supply chain driving its ability to churn out vehicles. Just one of its Gigafactories alone has been producing 35 GWh of batteries per year, with the potential to increase to a 54 GWh rate in the near future. This massive capacity has translated directly to huge sales volumes, as Tesla delivered 88,400 vehicles in the first quarter of this year. Even with conservative estimates using standard battery capacities, this equates to nearly 7 GWh of new EV battery capacity in consumers’ hands.
The End-of-Life Problem
The common theme of demand trends within the battery space is that lots of battery assets are getting deployed in various form factors and will need proper decommissioning in the years to come. Batteries are some of the most toxic things that humans make, both for human health and for the environment. While small household batteries such as single-use alkaline batteries can be relatively safely disposed of in landfills (though don’t get me wrong, recycling is definitely better for the environment), large energy storage and electric vehicle batteries need special processing to avoid harmful degradation.
The problem is, there isn’t an easy, transparent way for owners of these large battery assets to dispose of them properly. Some large companies like Tesla have taken matters into their own hands and built recycling capabilities of their own. Research is also being done in the public sector, with the Department of Energy teaming up with Argonne National Laboratory to establish the ReCell lithium ion battery recycling center to test and pilot novel battery recycling practices.
However, these approaches are all centralized solutions to a very decentralized problem. While concentrated collection and processing of end-of-life batteries could work for areas with a consistent supply of batteries to be recycled, the logistics of hauling literal tons of batteries can quickly escalate cost. Furthermore, battery disposal and recycling regulations can vary significantly across state lines.
For example, while California has comprehensive battery recycling laws covering a variety of battery chemistries and targeting 100% reuse or recycling of lithium ion batteries (including EVs) by 2022, none of its neighbors (Oregon, Nevada, and Arizona) have legal requirements for battery recycling. As a result, many asset owners, particularly those with battery assets across multiple geographies, are finding it increasingly difficult and costly to keep track of regulatory compliance regarding life cycle management.
Renewance is developing a novel stewardship product to bring unprecedented transparency and ease to battery asset life cycle management. Its Renewance Connect platform provides battery asset owners with the tools they need to ensure regulatory compliance throughout service life, keep track of warranties, connect with certified recycling centers, and maintain proper documentation and record-keeping.
Once customers upload basic specifications of their battery assets to the system (such as capacity, chemistry, and location), Renewance automatically provides information on warranty management and applicable regulations. When it’s time to decommission their assets, customers can simply select the batteries they need to dispose of and Renewance will automatically send out requests for quotes to certified partners. Simple, right? With its marketplace model, Renewance is poised to introduce a new standard of waste management for battery assets everywhere.
Looking Forward — The Future of Battery Stewardship
At Clean Energy Trust, we’ve seen a ton of innovation happening throughout the battery value chain, from component-level improvements to entirely new battery chemistries to advanced system-level controls. We’ve made investments in several battery innovators and have witnessed amazing things come out of our portfolio.
Renewance caught our attention with its foresight in addressing a vast impending problem and its ability to unlock a huge market that’s tied to each of our other battery investments. Regulations for proper battery disposal are becoming increasingly stringent and complex, and all battery assets will need proper end-of-life management in the coming years.
The need for a standardized approach to this decentralized problem is clear, as new battery assets across the country are entered into service daily. We anticipate the waste management market opportunity for batteries to be vast. While localized recycling capabilities are popping up across the country, there is a missing information link between these parties and asset owners.
Renewance’s matchmaking capabilities fill this gap, and its life cycle management services help customers ensure that they get the most value out of their assets’ service lives. While it may be years before battery assets are recycled at gigawatt and terawatt scales, we’re excited to support Renewance in its mission to pioneer this market.
Read more of our news and perspectives on Medium.