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Five years ago, B2U Storage Solutions proved that old EV batteries could hook up to the grid to store clean energy, safely and cheaply. Now the company is taking the concept to Texas.
B2U just broke ground on a second-life grid battery project in Bexar County, near San Antonio, the company told Canary Media. In the next 12 months, B2U will complete four projects in the region, totalling 100 megawatt-hours of storage, CEO Freeman Hall said. The move marks a major expansion for the scrappy innovator, at a time of increased interest in the value of used EV batteries.
On paper, it makes perfect sense: Putting old EV batteries to work on the grid tackles the waste stream created by the growing adoption of EVs while expanding clean energy storage at a discount compared to brand-new lithium-ion batteries. But delivering on the concept efficiently and safely is much harder in practice, and after years of trying, the industry has only installed a handful of utility-scale grid batteries.
B2U stores up to 28 MWh at its first project, in Lancaster, California, and also developed two other smaller facilities in that state. Another company, Element Energy, built a record 53-MWh second-life storage plant in Texas last year. Earlier this summer, lithium-ion recycling startup Redwood Materials beat that record: It unveiled a second-life battery business that includes a 63-MWh storage plant to serve an on-site data center in the Nevada desert.
B2U’s new portfolio won’t set any individual records, but it could prove out the repeatability of the second-life model. In developing for the Texas market, B2U focused on areas near population centers that face transmission constraints. It designed the projects as 10-MW systems with a little over two hours of discharge at full capacity, allowing them to qualify for a fast-track permitting program in the grid managed by the Electric Reliability Council of Texas, or ERCOT.
Once built, the batteries can arbitrage from cheap hours when the state’s massive solar fleet is cranking to peak-demand hours when electricity prices shoot up. Batteries, with their ability to instantly inject or absorb power, can also compete to provide various other forms of grid-stabilizing services in the ERCOT markets.
“Texas has been a very strong market with ever more volatility,” Hall said. “And that’s what storage does well, is take advantage of volatile conditions.”
The expansion draws on the company’s five-year track record of operating second-life batteries on the grid, and making money at it.
One lingering question for the sector has been how long the previously worn-down packs would survive when used for daily charging and discharging. The Lancaster project was designed to eke out 2,000 cycles from its initial batch of early Nissan Leaf batteries, Hall said; those packs have now exceeded that target.
Crucially, the equipment has not required much upkeep: Of the 2,000 battery packs that B2U operates so far, technicians have only had to pull out a single-digit number of them for maintenance, Hall noted. That has given the company confidence to dispatch the batteries a bit more intensely.
“We’ve got all these guardrails and real-time monitoring of the batteries that ensure safety, but we’re not as concerned about degrading the batteries,” Hall said. “They’re turning out to be pretty strong workhorses that don’t degrade as people thought they might.”
B2U said its first project, built in 2020, cost about $200 per kilowatt-hour, which at the time offered a roughly one-third discount compared to new battery systems. Today, new lithium-ion enclosures have come down to $150 to $180 per kilowatt-hour, Hall said, and B2U can deliver at half that rate based on the savings from used batteries. Accounting for additional costs associated with permitting, interconnection, and installation, a finished project comes in 30% to 40% cheaper than a new lithium-ion facility would, he added.
B2U has gotten this far with just $20 million raised in an extended Series A funding round, and another $8 million from the founders and friends. Hall built his California projects on the company’s balance sheet to prove out the concept, which was quite risky for most investors at the time. Consequently, B2U has reaped all the profits from those early investments.
Now, though, B2U has far less cash to throw at its projects than newly minted second-life competitor Redwood Materials. That company was founded by former Tesla Chief Technology Officer JB Straubel, a certified celebrity of the battery engineering world who swiftly raised $2 billion to tackle battery recycling. But Hall found Redwood’s arrival onto the scene more encouraging than intimidating.
“For the North American recycler that has raised the most capital and has been hyping the recycling opportunity the most to now make a big splash and say that they believe that the repurposing market can grow faster and generate more revenue than their core business — that’s quite the validation point,” Hall said.
Going forward, B2U has raised a fund to own its operating projects with a mix of outside equity, debt, and tax equity. That means Hall can sell off the projects to the fund (although B2U will keep a stake in them), freeing up money for new business activities. This sets the company up for faster growth than if it continued to support all its projects with its own corporate balance sheet.
Still, B2U maintains a rare distinction in the cleantech-startup universe: For relatively minor funds raised, the company has built real things that generate profits. Cleantech venture capitalists have heaped far more cash on pre-revenue companies chasing far more dubious propositions.
Five years ago was like “the first at-bat of the first inning” for second-life storage, Hall said, meaning he had a lot to prove in the field to dispel investor concerns about the novel technology. He took it slow on fundraising while he tackled those proof points.
“We’ve been very disciplined in deploying capital. That tends to be viewed by investors as a good thing, but the opportunity is such a big one right now that we need to do what’s smart for shareholders — and staying small probably no longer is as smart,” he reflected. “It’s probably time for us to grow, to take advantage of the opportunity in front of us.”
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