Imagine a future in which old electric-car batteries are deployed in neighborhoods as energy-storage systems that guard against power outages, while paving the way for wind and solar power—and more electric cars. The idea has moved one step closer with the demonstration of a boxy unit of used Chevy Volt batteries capable of providing enough electricity to power three to five average American homes for up to two hours.

Developed by General Motors and ABB, one of the world's largest electric-technology companies, the device features five lithium-ion battery packs from plug-in hybrid Volts, strung together in a new arrangement and cooled by air instead of the liquid used in their former lives on the road. The batteries are degraded below acceptable performance levels for cars, but the companies say the batteries have enough life to serve the grid for at least ten years in this device, a community energy storage unit.

"In a car, you want immediate power, and you want a lot of it," said Alexandra Goodson, business development manager for energy storage modules at ABB. Many grid storage applications, on the other hand, involve slow, steady delivery of energy. "We're discharging for two hours instead of immediately accelerating," she said. "It's not nearly as demanding on the system." (See related photos: "Seven Ingredients for Better Electric Car Batteries")

The Road to Renewables

The partners previously demonstrated the technology in a lab environment. Now, said Pablo Valencia, senior manager of battery lifecycle management at GM, "It's become a reality," during a presentation Wednesday in Sausalito, California, where GM set up a demo unit about the size of a few refrigerators to power video, lights, and audio in an outdoor tent. "This is an industry first, to be able to use secondary automotive batteries in a grid-based application," Valencia said.

To test the repackaged Volt batteries in the real world, partner Duke Energy, the largest utility in the United States, plans to install this unit next year in the field alongside a transformer. "We'll test it as long as it takes to highlight all the value streams," said Dan Sowder, senior project manager for new technology at Duke.

Deployed on the grid, community energy storage devices could help utilities integrate highly variable, and sometimes unpredictable, renewables like solar and wind into the power supply, while absorbing spikes in demand from electric-car charging.

"Wind, it's a nightmare for grid operators to manage," said Britta Gross, director of global energy systems and infrastructure commercialization for GM. "It's up, down, it doesn't blow for three days. It's very labor-intensive to manage." Sowder, whose company serves 7.1 million customers in the U.S. Midwest and Southeast, explained, "Our grid, and most electricity grids, are not really designed to handle that kind of rapid swinging. Storage can help dampen that out." Smooth delivery of renewable energy has been a major research area for Zurich, Switzerland-based ABB, the world's largest supplier of electrical equipment to the wind power industry.

Meanwhile, on the demand side, utilities are staring down the possibility of huge spikes in energy demand from electric cars, which represent "probably the largest electrical load introduced to a residential setting in 50 years," said Scott Hinson, director of the Pike Powers Commercialization Lab in Austin, Texas.

"That is a little bit alarming for a grid that was not designed to handle that load," adds Sowder. Community energy storage devices can be charged at times when, say, wind is kicking up a storm at night but there is little demand for electricity, and make it available when needed. "The result can be less infrastructure upgrades needed to support electric-vehicle charging."

Seeking Grid Solutions

GM isn't the only automaker looking to help build a secondary market for its electric car batteries. In January, Nissan North America joined with ABB, 4R Energy, and Sumitomo Corporation of America to announce plans to build a prototype of a grid storage system using Nissan Leaf batteries. (See related photos: "Eleven Electric Cars Charge Ahead, Amid Obstacles")

After all, if the battery—the most expensive part of an electric car—remains an asset beyond its useful life in the vehicle, Valencia said, "It helps with residual values." That's the term used to describe how much a car is worth at the end of its lease or the end of its useful life—a key factor in determining lease rates and resale values. As a result, he said, "We're helping the first customer."

"If there is a market in stationary power for spent batteries, consumers could recognize this as an increased resale value at end of life, however small," said Kevin See, an analyst with the research firm Lux Research.

Of course, because electric cars like the Volt and the Leaf are new to the market, there will not be a large supply of spent electric-car batteries for some time to come. The batteries are supposed to last for up to ten years in the car. For the demonstration unit, GM scavenged its own laboratories to find batteries that had been degraded by simulations.

The batteries in the demo unit had been degraded down to about 85 or 90 percent of their original capacity, Valencia said. "We were calling everybody and saying, 'Give me your oldest batteries,' " he said. But GM envisions old batteries eventually will be tracked down and purchased for grid-storage use through the same system used today to auction off parts like water pumps and starters at the end of vehicle life for recycling or rebuilding. Before a vehicle is scrapped, its ID number is scanned to pull up a list of all the "core" components for which there is demand.

Adapting lithium-ion batteries from electric vehicles adds complexity to the task of designing energy storage for the power grid, however. "You must take a battery that's designed to function in a very specific, mobile, volume- and weight-constrained application in cars," said See. And the necessary adaptations vary by type of car. "A fully electric vehicle battery is designed to hold maximum energy, while a hybrid is designed to have a higher ratio of power to energy." Ultimately, he said, this extra complexity "could add further cost in preparing those systems for an entirely different application than the one they were initially designed for." (See related story: "Battery Maker A123's Bankruptcy Underscores Hurdles for Clean Tech")

Spent car batteries face tough competition from new lithium-ion batteries designed specifically for a given grid application, said See, as well as alternative technologies like flow batteries and molten salt batteries, which have the potential to cost less. "There is and will be no shortage of Li-ion batteries given the explosion of manufacturing capacity in the face of limited demand," See said.

Yet it's possible that stationary power customers looking for batteries could purchase spent EV batteries at significant discounts, he said. "Those customers would be the real winners, provided those batteries hold up, rather than the automakers." Indeed, according to Sowder, Duke Energy is "hopeful," but not sure yet that adapted Volt batteries will save money.