Financing Opportunities:Battery Second Life

Adam LangtonCPUC Energy Division

Challenge for PEV Adoption

PEVs face a ~10K Price

Premium…

…and face twice the

depreciation rate of ICE

cars.

Year 1 Year 3

A Mature Secondary Market for Used PEV Batteries could….

• Improve re-sale value of vehicles for existing owners

• Avoid landfilling vehicle batteries, here or elsewhere

• Help meet State’s storage mandate

Utilities Can Facilitate Battery Second Life Financing

Upfront payment(lease or buy)

Customer

Used vehicle battery

(lease or buy)

Long-term grid services contract

(lease or buy)

Grid Values from Used Vehicle

Batteries

UtilityTransaction

/Finance Entity

Variations on the basic financing model involve changing one of three key variables:

• Vehicle acquisition form (purchase or lease)• Level of battery modularity (cells or battery packs)• Entity that facilitates the transactions (utility, third party, or exclusive licensee)

Risks and Unknowns• Uncertain grid performance of half-used

vehicle batteries– Specific to each battery type– Can be measured and assigned by financing entity

• Future Battery Costs– Expected to decrease – Utilities face similar risks for any investment

• Is grid storage the best application– Re-use in other vehicle applications might be

higher value

Possible Next Steps

• Continue Pilots, similar to the PG&E pilot, to engage stakeholders and explore contracting methodologies

• Partner with private entities with storage needs (data centers, hospitals, etc.) to aggregate demand

• Target fleet vehicles to minimize performance risks and encourage fleet adoption

• Evaluate the full supply chain benefits to capture additional positive externalities