Author: Piotr Grudzien, Head of Innovation at Cellect

Battery Energy Storage Systems (BESS) are one of the key technologies for the energy transition, helping to avoid curtailment of renewable generation and supporting the electricity grid. But how sustainable are they throughout their lifecycle, though? BESS integrators, project developers and asset managers play a crucial role in shaping their sustainability.

The International Energy Agency estimates that batteries currently on the market generate approximately 70-100 kg CO2-eq/kWh over their lifecycle, depending on the battery cell chemistry. The most carbon-intensive stages are active material processing and battery manufacturing. Assuming a battery helps avoid the loss of renewable electricity during discharge (thus reducing the carbon footprint of energy production), its environmental debt can be 'paid off' after about 500 cycles. Since BESS typically lasts around 5,000 cycles, their overall potential to mitigate climate change is ensured.

Yet, many stakeholders are pushing for more sustainability in batteries. Why? EU regulators are focused on addressing the scarcity of minerals used in battery cells, as Europe is highly dependent on importing metals like nickel and cobalt. For investors, increased sustainability often translates to better returns on investment, especially when they can maximize the number of cycles their BESS can complete before costly end-of-life management is required.

Over the past decade, the European Union has been actively addressing numerous challenges related to battery sustainability. In 2023, the EU took a big step by approving the New Battery Regulation, which is hailed as the most ambitious battery law globally. It introduces a series of innovative measures aimed at reducing the carbon footprint of batteries throughout their lifecycle.

Key provisions include stricter requirements for sourcing: battery producers will have to start replacing part of critical primary raw materials (such as cobalt, nickel and lithium) with recycles. The regulation also puts a strong focus on data sharing between stakeholders: from August 2024 key BESS parameters shall be accessible via battery management system, and from February 2027 this information will have to be shared via so-called ‘Battery Passport’. Increased data transparency will unlock many opportunities for better BESS management, especially at the end of its first life. To reduce waste generation and create supply of secondary raw materials, the EU also will enforce new battery recycling targets and EPR obligations.

The New Battery Regulation is certainly a good step towards improved sustainability of batteries, but the BESS industry will also need solid business cases to follow these rules instead of finding loopholes, e.g. for not sharing the data.

Building on our experience with various stages of BESS lifetime, we looked at sustainability recommendations in three key areas: project development, marketing and operation, and end-of-life management.

As a project developer, you have considerable influence on the sustainability of BESS. When selecting a battery supplier, consider choosing chemistries that use fewer critical raw materials. Lithium iron phosphate (LFP) battery cells are becoming a popular choice for BESS due to their decent lifespan, low cost, and higher sustainability, as they contain no cobalt or nickel. The next anticipated chemistry is sodium-ion (Na-ion) batteries, which could replace lithium, the last critical raw material. Another option is using second-life modules or packs from electric vehicles (EVs). Many EV manufacturers have batteries from the product development process that are in excellent condition but unsuitable for end-customer vehicles. However, creating a containerized solution from EV batteries is more complex, requiring strong integration expertise, detailed assessment of additional repurposing costs, as well as careful warranty design. Several European companies like Tricera and Connected Energy have already successfully implemented second-life BESS solutions. A thoughtful project developer should also prioritize BESS solutions that are easy to repair, dismantle, replace, or recycle, promoting circular battery management.

As an asset manager, there are several ways to minimize the environmental footprint of your BESS during operation. One of the most impactful decisions is your usage strategy. Most markets incentivize charge and discharge profiles that help balance the grid, especially with high renewable energy penetration (e.g., through ancillary services). However, in the pursuit of maximum trading revenue, marketers sometimes charge the battery using a ‘grey’ grid electricity mix, potentially increasing the BESS footprint due to transmission and round-trip efficiency losses. Ideally, from a sustainability perspective, operators should charge the BESS directly from co-located renewable assets, reducing curtailment.

Another key aspect of BESS sustainability is auxiliary consumption. To power components and maintain optimal temperatures, BESS sites typically consume 2-4% of the electricity they discharge annually from the grid. Choosing more energy-efficient power electronics and HVAC systems can reduce both the carbon footprint and operational costs, improving the overall business case.

One of the most effective ways to enhance BESS sustainability is by extending its useful life. Most battery suppliers offer performance warranties of around 10 years, typically defining end-of-life as when the battery’s State of Health (SoH) drops to 70%. SoH in BESS is usually assessed during annual onsite checkups to monitor degradation. Between checkups, SoH is estimated using algorithms with varying accuracy. The better your battery management system and analytics, the more accurately you can estimate SoH. Understanding the rate of degradation in relation to operational parameters (e.g., number of cycles per day, average cell temperature, depth of discharge) helps optimize usage patterns to extend BESS life.

When your BESS project reaches its end-of-life, it must be decommissioned. This involves discharging the battery modules to a safe level, dismantling them from racks, and transporting them in safety packaging to their next destination, typically a recycling plant. There, the batteries are further dismantled, shredded into black mass, and refined into secondary raw materials for new battery production. As outlined in the chart below, these processes are costly and should be thoroughly considered during project planning and BESS selection.

LFP batteries, though more sustainable and cheaper to produce, are expected to be more expensive to recycle than NMC batteries due to the lower value of recoverable materials. While recycling costs are unavoidable, they can be delayed by repurposing your BESS modules. Although the second-life use of EV batteries is well-explored, the BESS industry has less experience in this area. However, since stationary systems operate under controlled conditions, BESS projects can produce a large supply of uniformly degraded modules that are suitable for less demanding applications, such as residential or C&I energy storage, which have lower availability requirements than utility-scale systems. For greater transparency in circular management, ensure your contract with the battery supplier specifies ownership of end-of-life costs and remaining value. If you plan to sell your BESS modules, it is essential to collect all operational data, particularly an accurate estimate of the State of Health, as this will be the key indicator for maximizing value in the second-life market.

Addressing BESS sustainability is complex. At Cellect, we have developed a comprehensive asset management platform to track operational data and share it with stakeholders involved in marketing, maintenance, or end-of-life handling. Our Health Forecast feature provides predictive insights into your battery's longevity and health, using a semi-empirical degradation model. It estimates future capacity, enabling proactive planning for upgrades or replacements, based on current SoH status and degradation data from the battery management system.

Cellect continuously collaborates with research institutes to enhance model accuracy for Li-ion batteries. We have also recently joined the Stakeholder Advisory Board of the BatteReverse research & innovation project which aims to increase efficiency of Li-ion battery reverse logistics. Cellect provides input to the project on the requirements for BESS projects, data analytics and implementation of the Battery Passport which is one of the key measures introduced by the New Battery Regulation.

There is still much to be done in advancing BESS sustainability, and stronger collaboration among stakeholders is key to addressing future challenges.

Reach out to explore partnership opportunities or schedule a demo to see how Cellect can support more sustainable BESS management.