Daimler AG announced that it is cobbling together used lithium-ion batteries from electric and plug-in hybrid vehicles to create massive power storage systems for commercial use.

The first of Daimler's "2nd use battery storage units" will consist of 1,000 smart electric drive vehicle batteries and have a 13 million watt hour (MWh) capacity. It is expected to be connected to the electrical grid in Lünen, Germany early next year.

Daimler The battery systems are being built in Daimler's battery manufacturing facility in Germany.

"Currently, we plan the 2nd-use systems as large industrial-scale systems only. This means megawatt scale and larger," Stefanie Kulessa, a spokesperson for Mercedes-Benz Cars research and development, said via email to Computerworld.

A joint venture involves carmaker Daimler, battery-to-grid integrator The Mobility House AG, energy service provider GETEC and REMONDIS, a recycling company.

The reuse of the batteries will not only keep them out of landfills, but will help reduce costs in the EV marketplace by adding an additional revenue stream.

"With their 2nd-use battery storage project in Lünen, the four partners are proving that the lifecycle of a plug-in or electric vehicle battery does not end after its automotive application," Daimler said in a statement.

Depending on the vehicle, Daimler AG guarantees its electric vehicle batteries will have a life of up to 10 years with at least 80% efficiency. However, battery systems are still fully operational after that point, as the low levels of power loss are of minor importance when used in stationary storage.

It is estimated that the unit can operate efficiently in a stationary application for at least another 10 years, Daimler said.

Lithium-ion battery systems, which have become the de facto standard for homes and utilities, will enable electricity generated through renewable power, such as wind and solar, to be stored on site or used in larger grid-service systems.

The power stored in battery systems can be used during peak load hours during the business day to reduce draw on the grid. Battery capacity can also be used when power isn't being generated by renewable systems, such as at night and during inclement weather. That also reduces grid demand.

EV carmaker Tesla earlier this year announced a home and commercial battery storage system. The home system, called the Powerwall, is a 7 kilowatt-hour (kWh) system that will retail for $3,000 and a 10kWh unit that costs $3,500.

Tesla Tesla's Powerwall battery for homes can easily fit on a garage wall and offers either 7kWh or 10kWh or power storage.

The commercial battery system, called the Powerpack, will store 100kWh of power and retail for $25,000 each. The Powerpacks can also be daisy-chained together to create an infinite amount of energy storage capacity.

While Daimler doesn't currently plan to create energy storage systems for homes, it does believe its industrial battery systems will be "cost competitive" with the Tesla products.

"But costs, especially in large-scale systems, are very specific to a certain project -- such as the current project for industrial battery storage in Lünen -- and very much depend on location, etc.," Kulessa said.

Tesla and Daimler are far from being the only companies entering the energy storage market. Last year, SolarEdge Technologies and Enphase both announced plans to bring a lithium-ion home battery to their solar power management systems.

Enphase's is a lithium iron phosphate battery, which Enphase claims is more stable than lithium-ion. Enphase's battery, being produced by Japanese-based ELIIY Power, is expected to be available by mid-2016. The batteries will be roughly one cubic foot in size and offer 1.2 kWh.

GTM Research estimates that the U.S. market for energy storage management systems will grow 10-fold through 2019, creating a significant opportunity for players in the market.