Financing Opportunities Battery Second Life Adam Langton CPUC

Financing Opportunities: Battery Second Life Adam Langton CPUC Energy Division

Challenge for PEV Adoption PEVs face a ~10 K 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) Transaction /Finance Entity Long-term grid services contract (lease or buy) Utility Grid Values from Used Vehicle Batteries 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