Once separate and distinct, the automotive and energy sectors now have much in common.
The two industries are merging, giving technologies built for zero-emission vehicles new uses in home energy storage, industrial projects and battery farms that support shaky electricity grids.
New developments in batteries and hydrogen fuel cells are gaining momentum as electric vehicle sales slow, opening up new opportunities for traditional auto companies.
“This can be seen as a second pillar for them,” said Alexander van de Rijt, who heads McKinsey & Co.'s battery and energy storage analytics practice.
McKinsey estimates that the global battery energy storage market will reach US$120-150 billion by 2030, more than double its current size.
Renewable energy is driving the boom. Sources like solar, wind, and hydropower generate about 21 percent of the U.S. electricity, according to the Energy Department. But renewable energy is often unstable. When darkness falls or the winds die down, there isn’t enough power to meet demand, especially as more electric vehicles and data centers arrive in droves.
Flexibility is essential. Implement storage systems that collect solar and wind energy and release it to the grid during periods of peak demand.
Tesla sees an opportunity here. Its energy storage and generation business generated more than $3 billion in revenue in the second quarter. It deployed more than 9.4 gigawatt-hours of energy storage, including Tesla Powerwalls and Megapacks, double the first quarter.
“I think people don’t realize how big the demand for energy storage is going to be,” CEO Elon Musk said at a Tesla press conference on July 23.
In July, the automaker reached an agreement to sell 15.3 gigawatt-hours of its large-scale Megapack energy storage systems to Intersect Power for four massive projects in California and Texas. The companies said the deal would result in “some of the largest battery installations in the country.”
These projects do not always require new batteries.
In California's Mojave Desert, a field of solar panels larger than a football field sits next to clusters of white cabinets that hold more than 1,300 recycled electric vehicle batteries.
Together, they form a 28-megawatt-hour hybrid energy storage system built by B2U Storage Solutions Inc., which has been selling electricity on the California energy market since 2020.
The company operates 580 batteries in a similar project in Santa Barbara County, with other projects underway.
“This is the very first out of the very first inning of a massive transition that will see many electric vehicles reach the end of their life cycle,” said B2U President Freeman Hall.
The company buys batteries from Nissan Motor Co., Ford Motor Co., American Honda Motor Co. and two other automakers that have not yet been publicly named. Instead of recycling the batteries, the automakers give them a second life.
B2U both buys and leases batteries. The latter helps automakers ensure that batteries are used in a way that meets sustainability goals and, in some cases, new regulations for battery lifecycles. Meanwhile, B2U makes a profit, Hall said.
Hall had an “epiphany” about the potential of used EV batteries in 2016 when he met with a Nissan executive. The first Nissan Leaf EVs, released in 2010, needed their batteries replaced under warranty due to deteriorating performance. The batteries were still functional, but they lacked the energy storage needed by the vehicles.
B2U collected 300 batteries in its initial efforts and found them suitable for storage. Hall foresees both an increase in the supply of used batteries and a need to use them to stabilize the power grid.
“This instability is only going to get worse,” he said, “and these batteries are the resource that fills the gaps.”
Batteries are not the only new option for powering stationary systems, and utilities and grid operators are not the only potential users.
Toyota Motor Corp. is exploring the potential of hydrogen fuel cells through a new commercial collaboration with Kohler Power Systems, a longtime supplier of home and industrial power systems.
Using the same fuel cells that power the automaker's Mirai sedan, the companies are equipping a hospital in rural Washington state with a backup power generation system that is expected to be operational this year.
A first-of-its-kind 100-kilowatt system at Klickitat Valley Health in Goldendale, Washington, can power the hospital for 10 to 12 hours.
Similar battery storage systems provide only four to six hours of runtime, said Ben Rapp, head of business development at Kohler.
“Fuel cells can last longer than batteries are limited to,” he said. “Fuel cells are the closest replacement for traditional backup power solutions, and that's because of their performance.”
One drawback is that fuel cells are new to the field. Lithium-ion batteries now dominate storage “because the technology is proven,” van de Rijt said.
While this is Toyota and Kohler's first foray into the market, the companies expect further interest and contracts.
Toyota has stepped up its hydrogen efforts around the world. In May, the automaker opened North American Hydrogen headquarters in Gardena, California, a center for testing new hydrogen technologies. Toyota and its subsidiary Woven Planet are testing cylindrical cartridges — about the size of a large thermos — that store hydrogen to power homes and appliances.
The market for residential energy storage is growing, van de Reijt said.
General Motors launched its GM Energy business in October 2022 to capitalize on this trend. The unit developed bidirectional charging equipment so that vehicles themselves can function as Storage devices: The automaker's 2024 Silverado EV pickup truck could provide enough energy in some circumstances to power a home for 21 days.
Utilities are planning to tap into the potential of electric vehicles and other energy storage systems.
“We see electric vehicles, car charging and car-to-home power delivery as a really important part of the future that's already here,” said Christine Kelly, a spokeswoman for Green Mountain Power.
The Vermont utility offers incentive programs for storage devices. In one such program, customers can rent two Tesla Powerwall chargers for $55 per month with no upfront cost.
Promoting energy storage at the edge of the system also helps grid operators and utilities, van de Rijt said. It represents a much cheaper upgrade than a major overhaul of core infrastructure.
“The grid is either not equipped or not ready for this whole transition,” he said. “Think of batteries as almost a virtual transmission line.”
A new solution to a costly infrastructure problem that the auto industry may be able to offer.