Energy storage was not mentioned at all! Under the new policy, the direction of the battery industry has changed!

I. What is "Tiered Utilization"?

Before understanding the policy changes, we must first understand what "tiered utilization" is.

We've actually heard of the concept of tiered utilization for several years. The familiar advertising slogan of "Nanfu Battery" from years ago, "When the toy car is used up, the remote control can still be used," exemplifies this concept.

When the capacity of the power batteries in new energy vehicles decays to around 80%, they no longer meet the complex driving requirements and high power demands of vehicles, and are thus "retired." However, these batteries are not entirely useless; they still retain a considerable amount of remaining capacity. Tiered utilization involves testing, classifying, disassembling, and reassembling these retired batteries to create tiered products suitable for applications with lower energy density and power requirements.

Over the past decade, Energy Storage has been widely recognized as the core application scenario with the greatest potential for tiered utilization. This is due to its obvious theoretical advantages.

First, there's the cost advantage. Second-hand batteries typically cost about 30% less than new batteries, making them highly attractive for energy storage projects sensitive to initial investment. Furthermore, energy storage scenarios such as peak shaving and valley filling, and backup power, have relatively relaxed requirements for battery cycle life and rate performance, perfectly matching the residual value of retired batteries.

Encouraged by policies, the use of second-hand batteries has been seen in everything from communication base stations to industrial and commercial energy storage, and even some grid-side projects. Energy storage was once considered a panacea for solving the problem of what to do with retired batteries.

II. The concept "disappears"! Why is energy storage no longer mentioned?

Given such a perfect logic, why did the new regulations resolutely abandon "second-hand utilization" and make no mention of energy storage? This is mainly due to the disconnect between ideal and reality.

The primary and core issue is safety, which is the direct reason that overshadows the application of second-hand utilization in the energy storage field. After experiencing complex vehicle operating conditions, retired power batteries exhibit inconsistent aging of internal materials, resulting in extremely poor uniformity. This "weakest link" effect means that the performance and safety of the entire energy storage systemdepends on the weakest battery. Overcharging and over-discharging of the weakest cell can easily lead to thermal runaway. For example, in 2022, a 10MW cascaded energy storage Power Station in Nantong experienced thermal runaway due to parallel circulating current, ultimately resulting in a safety accident.

As early as 2023, the National Energy Administration clearly stated in its "Twenty-Five Key Requirements for Preventing Power Production Accidents (2023 Edition)" that medium and large-scale electrochemical energy storage power stations should carefully select cascaded power batteries. In 2023, Beijing explicitly prohibited the use of cascaded power batteries in its solicitation of new energy storage projects. For the power grid, the safety redundancy of energy storage power stations is the bottom line; connecting large numbers of retired batteries with uncertainties to the grid is tantamount to a time bomb.

While the procurement cost of cascaded batteries is low, their overall operating cost is not. The screening, dismantling, and reassembly of retired batteries require significant manpower and resources. More critically, because the remaining lifespan is difficult to predict accurately, cascaded Energy Storage Systems may fail to meet project return-on-cost requirements after only a few years of operation. Some analysts point out that, considering the high operation and maintenance costs and short cycle life, the cost per kilowatt-hour of such systems may even be higher than that of systems using new batteries. In the current highly competitive market for energy storage systems, investors tend to choose new batteries with clearly defined performance and warranties, rather than the uncertainties of second-hand products.

When an accident occurs in a second-hand energy storage system, who should bear the responsibility? The upstream power battery manufacturers, or the midstream second-hand integrators? This unclear division of responsibility makes relevant parties hesitant to get involved.

Because of these irregularities, the market is flooded with "second-hand" products of varying quality, and there have even been instances of used batteries being illegally used in fields with extremely high safety requirements, such as electric bicycles, seriously threatening the lives and property of the public.

Therefore, the new regulations no longer use the confused concept of "second-hand use," not to block the path of reuse, but to draw a clear line and rectify the situation. The Ministry of Industry and Information Technology explicitly emphasizes that "battery products, regardless of the method of production, must meet the quality standards required by the application field." This means that energy storage can no longer act as a "safety net" for low-quality, unsafe retired batteries.

III. What will become of retired batteries?

It is predicted that by 2030, my country's waste power battery generation will exceed 1 million tons, potentially reaching 171 GWh. If energy storage no longer accepts them, where will they go?

The answer is not without a solution. The regulations clearly state that waste power batteries unsuitable for reuse can directly enter the comprehensive utilization stage to extract valuable metals. Currently, my country's hydrometallurgical technologies are very mature, with some companies achieving nickel, cobalt, and manganese recovery rates exceeding 99%, and lithium recovery rates exceeding 96%.

This means that the best option for retired batteries may no longer be "reusing," but rather "dismantling and reusing." The batteries can be directly crushed and recycled to extract high-value metal materials.

Although the concept of "tiered utilization" is no longer mentioned, this does not mean that retired batteries cannot be used for energy storage at all. The prerequisite is that disruptive technologies must be developed to solve the fundamental issues of safety and consistency.

Saying goodbye to "tiered utilization" is not saying goodbye to the circular economy, but rather saying goodbye to that chaotic, dangerous, and speculative old era.