During the research for this article, two types of battery-as-a-service cases emerged:
- The As-A-Service model applied to electric vehicles batteries,
- The battery systems for energy storage and redistribution to the grid.
McKinsey forecasts that the market for battery cells will grow, on average, by more than 20 percent per year until 2030, reaching at least $360 billion globally. For battery-powered vehicles, Battery-As-A-Service usually means the separation of the costly battery component from the rest of the vehicle. It provides an infrastructure where users can exchange their empty batteries for fully charged ones. It means flexibility and time savings for the users whilst simultaneously reducing the upfront cost due to the battery being the most expensive component of an electric vehicle.
For battery systems (including energy storage with the possibility to use and/or redistribute to the grid): It gives large energy users such as commercial and industrial sites, campuses, and governments, an opportunity to manage energy demand, reduce costs,and create a new income stream. It contributes to the energy transition through shared energy storage in smart batteries.
The environmental challenges
While electric vehicles are expected to significantly decrease greenhouse gas emissions, their batteries have an environmentally damaging downside: some of their components are rare, limited and polluting to extract. Recycling batteries, whilst a solution, also comes with environmental and social challenges.
In order to tackle human right abuses and ensure batteries are more ethically sourced, Members of the European Parliament back the introduction of a due diligence obligation on battery manufacturers. They will have to comply with requirements addressing risks around the sourcing, processing and trading of raw materials, chemicals and secondary raw materials.
Recycling batteries is challenging for several reasons: lack of standardisation, lack of recycling technologies, and lack of infrastructure (see our white paper Reuse, Reycle, Refurbish, applied to the energy equipment).
Moreover, there are challenges which impact on the feasibility of second-use, such as unclear regulations and technical challenges. The European Parliament is working on new rules to tackle related environmental, ethical and social issues. It is working on an update of the EU's battery directive (2006/66/EC) as part of the European Union Circular Economy Action Plan to ensure that batteries can be repurposed, remanufactured or recycled at the end of their life.
With all these governmental, stakeholders, and image pressures, moving to a circular business model like As-A-Service for batteries is a way to differentiate in the market and surpass some of these challenges.
Enabling circularity with Battery-As-A-Service
A Battery-As-A-Service model would not only help the take-back of more batteries but also facilitate decisions about second life, whether it be reusing, recycling, or refurbishing them. This model allows the manufacturer greater control of the battery. It also means their responsibility of the batteries through their different uses and ensuring an end-of-life strategy, thereby encouraging circular design for recycling. Rethinking the notions of ownership and usership of batteries contributes to achieving a circular economy and an efficient end-of-life management system.
Battery-As-A-Service helps manufacturers and integrators to run more regular diagnostic checks, use real-time data to detect faults, predict failure and facilitate proactive maintenance. It would also allow the manufacturer to decide the point at which it would be most cost effective to replace components, or the entire battery pack.
What are your thoughts on Battery-As-A-Service?
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