Smart Cities

“No Benefit to Basing Home Energy Storage Systems on Automotive Batteries” says Mercedes Benz

“There will be no benefit to basing home energy storage systems on automotive batteries, in the medium or long term,” a representative of Mercedes-Benz Energy said, turning the emerging market on its head. The high performance requirements of electric vehicles (EVs) mean that not only do they demand powerful batteries but they are also ready to ditch those batteries when they lose just 20-30% efficiency. Home energy storage demands, in contrast, are much less taxing on batteries and this created the opportunity to give old EV batteries a second life - thereby generating additional value from these relatively expensive devices and encouraging the green solar + storage trend. “The sheer expense of developing and building those batteries in the first place makes a compelling case for capturing some additional value after their initial use. Second-life applications also delay the need to dispose of these resource-intensive products, which nobody has yet figured out how to do […]

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“There will be no benefit to basing home energy storage systems on automotive batteries, in the medium or long term,” a representative of Mercedes-Benz Energy said, turning the emerging market on its head.

The high performance requirements of electric vehicles (EVs) mean that not only do they demand powerful batteries but they are also ready to ditch those batteries when they lose just 20-30% efficiency. Home energy storage demands, in contrast, are much less taxing on batteries and this created the opportunity to give old EV batteries a second life - thereby generating additional value from these relatively expensive devices and encouraging the green solar + storage trend.

“The sheer expense of developing and building those batteries in the first place makes a compelling case for capturing some additional value after their initial use. Second-life applications also delay the need to dispose of these resource-intensive products, which nobody has yet figured out how to do economically,” said Julian Spector, in an article for Greentech Media.

“If storage vendors can re-sell used batteries as a cheaper alternative to new storage, they could help more people consume their own rooftop solar generation, or reduce their peak demand, or any number of other uses that would advance the progress of a low-carbon grid,” he added.

Automotive companies saw this opportunity and began to seize it with a variety of initiative and schemes designed to retrieve batteries from EVs and repurpose them for homes. In June 2015, Nissan became the first traditional automotive company to move beyond pilot-testing second-life batteries with the launch of a full-scale commercial business alongside the California-based startup Green Charge Networks. The same month, General Motors announced a new project testing used Volt batteries.

In 2017 Renault and Powervault announced a partnership to re-use electric vehicle (EV) batteries in home energy storage units. This partnership will reduce the cost of a Powervault smart battery unit by 30%, helping Powervault to bring home energy storage to the tipping point of mass-market roll-out in the UK. Similar partnerships and initiative are in motion for almost all automotive companies with EV programs.

“For automakers, the goal is to make electric vehicles cheaper, and one way to make them cheaper is to give the battery a second life,” said Michael Mohnhaupt, president of U.S. operations for The Mobility House, a German startup founded in 2009 to support grid integration of EVs and vehicle batteries. “If the battery has a value after its life in the car, you can see additional value instead of dismantling it and paying someone for doing it.”

It was in 2016 that parent company Daimler began an extensive program to give a second life to its Mercedes EV batteries. Keen to compete with other automotive firms who had already entered the market, Daimler promised to leverage its considerable brand recognition, global scale and manufacturing supply chain to take the lead in this area. The firm soon partnered with major rooftop solar installer Vivint, and even pried its energy division CEO, Boris von Bormann, from fellow German home storage company sonnen’s US operations.

So the news, this month, that Daimler had taken the decision to exit the home energy storage market, came as somewhat of a surprise. The company announced that it is discontinuing its 2017-launched energy storage project related to the development of a home battery pack, and reallocating the team of employees working on the energy storage system to other divisions of the company. The reason, they say, is that their is simply no economic benefit.

“Even if different synergy effects are recognisable between automotive and stationary battery systems today, our current analyses show that the economic efficiency of home energy storage systems based on automotive battery systems will not exist in the medium and long term either,” said Daimler communications and PR manager Henry Schroeder. “In particular, the performance requirements of the highly complex automotive battery systems far exceed the values required for the home storage market,” he added.

The announcement will creates waves across the industry. Such a clear statement of no-confidence in the market will call into question the projects of all other EV manufacturers. “It’s not necessary to have a car battery at home: They don’t move, they don’t freeze,” Mercedes-Benz spokesperson Madeleine Herdlitschka told GTM Research. “It’s overdesigned.”

Whether Daimler jumped ship at the right moment remains to be seen. Market leader Tesla, quietly raised the price on its year-and-a-half-old Powerwall 2 last month, suggesting that costs or sales are not quite matching their expectations. Other automotive firms will no doubt be reassessing their second life battery projects in the months to come, and if more decide to follow suit then then market may begin to collapse.

2018 is now set up to be a crucial year for the second life EV battery market, which had promised to lower the cost of stationary energy storage and increase adoption to encourage the solar + storage movement. While collapse of the converted EV battery market won’t kill stationary energy storage it will make a big dent in its ambitions for growth.

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