Battery Recycling Realities for Energy Storage Investors


One of the most fervently debated and poorly understood topics in energy storage is the subject of battery recycling. What percentage of the raw materials that go into a battery can be economically recovered from used batteries with existing recycling technology and infrastructure? While the details are quite complex, this article will offer a high-level overview of the economics of battery recycling for energy storage investors. 

Lead-acid batteries are the most recycled products in the world. The process is both straightforward and cost-effective. When batteries arrive at the recycling plant, they're put through a shredder and then sent to a water bath. The shredded plastic floats to the top where it's cleaned and reprocessed like any other recycled plastic. The shredded metals sink to the bottom where they're transferred to a blast furnace for further processing. The output from the blast furnace is mostly molten lead with small amounts of copper and other metals that are skimmed from the surface for disposal or further processing. The lead is then poured into ingots and returned to manufacturers for use in making new batteries. 

Because of the inherent efficiency of the recycling process, over 97% of all lead-acid batteries in the US and Europe are recycled and almost 80% of the lead used in the US comes from recycling rather than mining. Many major lead-acid battery manufacturers, including Johnson Controls (JCI), Enersys (ENS) and Exide Technologies (XIDE), operate company-owned recycling facilities for the dual purpose of protecting the environment and stabilizing their raw materials supply chains. 

Nickel Metal Hydride [NiMH] batteries present a more complex recycling challenge than lead acid batteries. First the electrolyte is evaporated using a thermal process and the batteries are then shredded and put into a blast furnace. The output from the blast furnace is a simple alloy of nickel (~60%) and steel (~40%) that requires moderate post-recycling processing before the metals can be reused to make stainless steel. All rare earth metals in NiMH batteries end up in a slag that's either sent to a landfill or used for construction material. 

Using material recovery estimates published by Umicore Battery Recycling and average annual metal prices from the US Geological Survey, I've calculated that roughly two-thirds of the raw materials that go into a NiMH battery are recoverable through recycling while one-third of those materials are lost forever.

Lithium-ion batteries are a couple steps beyond NiMH in terms of recycling complexity and cost. The closed loop Umicore recycling process that will be used to recycle batteries for Tesla Motors (TSLA) includes the following steps. 

  • Step 0: collection and reception of batteries (worldwide, Hoboken (Belgium)
  • Step 1: smelting + energetic valorisation (in Hoboken, Belgium)
  • Step 2 & 3 : refining & purification of metals (in Olen, Belgium)
  • Step 4 : oxidation of Cobalt chloride into Cobalt oxide (in Olen, Belgium)
  • Step 5: production of Lithium metal oxide for new batteries (in South Korea)

The electrolytes, plastics and carbons used in lithium-ion batteries are burned off and destroyed in the recycling process. The output from the blast furnace is a complex alloy of cobalt (~37%), steel (~37%), Copper (~22%) and Nickel (~4%) that requires extensive post-recycling processing before the metals can be reused. The lithium and aluminum end up as slag that is either sent to a landfill or used as construction material.

Using material recovery estimates published by Umicore and average annual metal prices from the US Geological Survey, I've calculated that about half of the raw materials that go into a lithium-ion battery are recoverable through recycling while the other half the materials are lost forever.

In a press release last week Tesla announced a new battery-pack recycling program with Umicore. A related blog from Tesla's Director of Energy Storage Systems spoke in glowing terms of how the recycling would provide "a high margin of return." The claims may defensible in Tesla's case since (a) they use lithium cobalt oxide batteries and roughly 75% of the economic value recovered through the use of Umicore's process is attributable to the recovered cobalt, and (b) even $1 in recycling revenue would be a "high rate of return" when compared with the alternative of paying a landfill tipping charge. It's certain, however, that Tesla's potential recycling revenue won't be more than a low single digit percentage of the cost of a new battery pack. For chemistries like lithium-iron-phosphate from A123 Systems (AONE), lithium-magnesium-phosphate from Valence Technologies (VLNC), lithium-iron-sulfate and lithium-magnesium-oxide from Ener1 (HEV) and lithium-titanate from Altair Nanotechnologies (ALTI) that use cheaper electrode materials, recycling is likely to be a major cost burden instead of an insignificant revenue source.

Disclosure: None.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks , Technology

John Petersen

John Petersen

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