Batteries and the bottom line: why going green is just better business
Introduction
The USA’s Inflation Reduction Act sets aside US$400m for sustainable technologies. The EU’s ETS trades carbon credits on a polluter-pays principle. Consumers look for solid CSR credentials when making buying decisions. If there’s one area where public and politicians seem to agree, it’s that greener energy is better energy – and with the cost of electrical storage falling 97% in the last thirty years, many applications see large-format batteries as the chosen strategy.
But there’s more to it than buying Li-ion units by the ton. True sustainability with batteries means looking at the supply chain, regulatory regimes, and whole-of-lifecycle costs as part of your environmental strategy. That’s why environmentally-conscious managers still have questions about the role of batteries in the energy mix – whether they’re installed in vehicles, balancing the grid, or backing up buildings.
They worry about the costs of recycling at end-of-operational-lifetime. They worry about the impact of mining the rare-earth elements batteries contain. Most of all, they worry about the total environmental cost of ownership, knowing that a simple cost-per-kilowatt calculation doesn’t tell the whole story.
All this means “going battery” isn’t a single, simple decision. Complicated by the lack of knowledge about what’s going on inside those devices – and how deeply patterns of usage affect a battery’s performance over its lifetime. (Of course, that’s where TWAICE comes in – but more on us later.)
“Although battery growth will confer multiple environmental and social benefits, many challenges lie ahead. To avoid shortages, battery manufacturers must secure a steady supply of both raw material and equipment. They must also channel their investment to the right areas and execute large-scale industrialization efficiently. And rather than just greenwashing – making half-hearted efforts to appear environmentally friendly – companies must commit to extensive decarbonization and true sustainability.” – McKinsey Consulting, 2022
In this article, we’ll explore what sustainability with batteries really means … and how you can make it pay. After all, this is more than just an ESG strategy – it’s a business strategy, where a range of decisions affect your cost centers, profit margins, and growth.
And what do decisions need? Information. Let’s start there.
Decarbonizing with batteries: emission scopes and the triple bottom line
Many organizations use the Scope 1/2/3 emissions model to calculate total environmental impact. Scope 1 is the easiest part: it’s the greenhouse gas emissions (counted as “carbon equivalent units”, or CO2eq) directly produced by your business activities. That means your machinery and equipment in use, your on-site power generation, and what comes out of a vehicle tailpipe. Many ESG professionals know how to calculate these totals well.
Scope 2 covers the emissions produced by stuff you buy in from outside – your electricity and gas bills, steam or heat used in industrial processes, raw materials that give out greenhouse gases (GHGs) in the production process. While it’s harder than adding up the gasoline burnt in your fleet, there are well-agreed ways to get an accurate picture of your environmental costs here.
Scope 3, however, is capital-H Hard. It’s the emissions you create indirectly, upstream and downstream in the value chain. Calculating them involves digging deep into your supplier’s policies, the raw materials you buy and where they came from, working conditions at distant factories, and what happens in future years when the products you bought reach the end of their useful lives. Not to mention the thousand-and-one complications along that chain – who produced that carbon? What percentage of it am I responsible for? Am I double-counting?
This is what creates confusion over the sustainability of battery technology – because as complex assemblages of materials with a limited lifespan, batteries are almost all Scope 3.
Fortunately, there are ways to estimate environmental impact without needing to make direct measurements. They’re the basis of an accounting approach called the triple bottom line: planet, people, and profit, where what’s good for the Earth and society are balanced with financial goals.
Here’s the point: a battery-based strategy turns out to be good for every one of those line items – with increasing recyclability and sustainable sourcing, low emissions over their lifespan, and a long working life when used in the right way. We’ll take each in turn.
Planet: the environmental pluses of battery technology
For your vehicles alone, choosing BEV (Battery Electric Vehicles) over ICE (Internal Combustion engine ones), has an obvious impact on your carbon accounting. In Scope 1, the effective emissions from a pure EV are zero instead of 400g of CO2eq per mile. While a modern EV’s battery pack is good for up to 200,000 miles, meaning it’s unlikely to need replacing until long after the vehicle leaves your hands. Of course, this doesn’t fully cover Scopes 2 or 3 – but it’s a great start.
And while EVs get all the press, less glamorous applications like off-peak energy storage for renewable installations offer benefits too. There are multiple ways to store the non-linear output from wind and solar, from heating molten salt to rolling a ball up a hill, but batteries are arguably more consistent and easier to deploy than any alternative. (Tesla built out a 100mW battery farm in just 100 days years ago.) If you’re using inhouse electricity generation, as many remote factories do, that’s great news for your Scope 2 emissions – because they too will be close to zero.
That makes Scope 3 the main factor: the upstream and downstream impact of the battery units themselves. And there’s an upside here that’s getting better all the time.
If you’d heard stories that large-format battery manufacturing is intensive on energy use, wasteful of raw materials, and hard to recycle and end-of-life …. those stories are true. They’re also a decade out of date.
Modern lithium-ion technology does contain rare-earth materials and metals like cobalt, nickel, copper, and manganese. But all these can now be recycled. And when they are, those materials often go into a new unit without needing to be reduced to raw elements first – the exhausted battery is stripped down and rebuilt, with minimal losses and efficient use of energy. This is where Scope 3 comes in: if your energy storage array has a high degree of recyclability, your Scope 3 costs to the planet plummet.
That’s the planetary angle. But what about the social aspect of our triple bottom line model?
Social: what the battery option does for the population
There’s nothing warm-and-fuzzy about caring for people as a business strategy. People are ultimately our customers and users; they’re responsible for our business success, and their view of our reputation matters to our brand image. Which means this corner of the triple bottom line is good for business, too.
From the EV and hybrid perspective, the Scope 1 benefits are obvious: your vehicles aren’t choking sidewalk users as you drive past. And if you adopt a policy of only using charging stations from renewable sources, there are benefits under Scope 2 as well.
Even if you get your electricity from non-renewables – such as coal-fired power stations – at least the emissions are concentrated in a small geographical area far from population centers, with a positive effect on people’s health. And many companies explicitly choose a renewable-sources strategy in any case, with the availability of renewable power rising each year. These are reasons why demand for lithium-ion battery technology is expected to rise to at least 2 TW by 2030, and 4.7 TW according to McKinsey.
It's in Scope 3 though that lithium-ion battery storage looks like a winner. Because recyclability at scale has surged.
As recently as 2019, barely 25% of a Li-Ion battery escaped landfill; the cost of recycling the lithium was around 5x the cost of mining it fresh. But that’s changed. Today, up to 96% of an old unit can be recycled. And with government incentives like Europe’s Drive Sustainability and Battery Passport providing both economic and legal incentives, there are solid reasons to do so. Even those landfills, today, are being “mined” themselves to recover valuable old materials like cobalt and manganese. And the batteries themselves are using fewer of those materials every year.
** Want to learn more about the battery supply chain and lithium sourcing? Watch the TWAICE Vision Speaker Series - Battery Supply Chain **
All this means a battery is more sustainable today than at any point in the past – which is great for the climate, the products, and the overall population. (That includes the population further up the supply chain, such as the people mining cobalt across Africa – for whom working conditions, while far from ideal, are at least improving under agreed international monitoring schemes.)
Next, let’s look at the most traditional corner of our triple bottom line: the money.
Profit: making good intentions make good money
Of course, any CFO looks first at the spreadsheet. Going electric may cost more upfront, since it involves capital expenditure rather than operational expenditure: the first battery unit costs more than a first tank of fossil fuel. But what really matters to the business is total cost of ownership, the concept that unites our triple bottom line.
With Scopes 1, 2, and even 3 optimized for people and planet, what’s left is the core business case of profit. Luckily, it’s here where the benefits may actually be highest.
Around the world, EVs attract lower taxes and higher incentives. While the actual cost-per-mile is typically four or five cents, versus sixteen f or gasoline-powered autos. (As you’d expect, hybrids fall in the middle, but still beat dead dinosaur fuels.) Scope 1, your direct emissions, are well catered for here. And thanks to huge investments in offshore wind (Europe) and solar farms (America) – with even tidal making waves in places like the UK – renewable energy is going head-to-head with fossil sources, as tax systems cost in carbon emissions more and more each year.
The tl;dr: for a range of applications – whether you’re powering a datacenter or operating a fleet – battery-based technologies are not only cost-competitive with fossil-powered ones but also the most sustainable solution overall, considering profit, people, and the planet.
But just as your lead-footed daughter gets lower mileage when she borrows your car, the way you use batteries has an impact on the bottom line … one that goes beyond the initial purchase.
And that’s the space where TWAICE plays. Because active management of your battery infrastructure can result in more balanced loads, more output per input, a longer useful life for each unit, and a host of sustainability applications driven by the insights you learn. All based on what matters most: data.
If your usage profile makes a battery fall to 80% of its original capacity twice as fast as planned, that battery will need recycling sooner. Or if temperature and humidity are factors where you work, a battery can simply give up at a critical moment, creating a flood of red ink on your P&L. Over the longer run, predicting how a battery unit will fade or fail can have a huge effect on how much it adds to your profits.
We don’t see that battery in a rack as simply a source of power. We see it as a source of business information … insights that enable real competitive advantage.
Now comes a few words on TWAICE. Imagine being able to:
- See how your battery fleet is performing in real time, and dig deep into the numbers to see where it could be improved to deliver more for your business
- Predict time-to-failure and other probability patterns across your organization, enabling business continuity without interruption in a range of operating conditions
- Removing the energy storage array as a potential point of failure, de-risking business processes that rely on it and avoiding unexpected downtime
- Simulate changes to your mix of energy storage before rolling them out in the field, analyzing What-If scenarios without risk to your business
- Optimize the design and structure of your energy storage solution, seeing where inefficiencies and opportunities are in your current configuration and being able to demonstrate the advantages of a new design or a change
- Understand the financial impact of using batteries and getting full transparency on the warranty status
And the outcomes? Imagine if those insights could deliver two additional years of genuine performance for a remote-site energy backup solution. Or if a different mix of vehicle types on your distribution network could lead to a 10% drop in recharging costs. Or if a proven clean ‘n green image in front of your customers would boost your brand equity by a quarter. All these have a real effect on sales efficiency. Profit margins. Stock price.
What’s more, it means the three parts of your triple bottom line – planet, people, and profits – share the same driving factors. Lower environmental impact, by keeping the units themselves useful for longer. Happier humans, by adopting technologies that make sense for both their health and your brand. And a sustainable way to compete, by making your energy use across Scopes 1-3 both effective and efficient.
In the end, there’s nothing more sustainable than making money.
Conclusion: The battery advantage is already here – and it’s only just begun
From the above, it’s clear that large-format battery storage is a key enabler for sustainable energy across departments – from your vehicle fleet to your building backups. But it’s equally clear that the way you use those investments is where the real value lies.
Analyzing the way your batteries perform opens up multiple opportunities in everything from public relations to regulatory compliance; from boosting profit margins to maintaining business continuity; from sustainable sourcing to improving the working conditions of millions. Removing risks, avoiding shocks, at every juncture of the supply chain. And with recyclability rising all the time, a policy based on battery-stored energy makes sense at every scope of emissions calculus, too.
All this means is that making smart choices about your energy usage isn’t just good for the environment; it’s good for business. And when you team up with predictive analytics software that can guide your usage to great effect, you’re not only choosing the right assets: you’re making them work harder for you.
We hope this answers any concerns you had about batteries creating problems for you across their lifecycle. To talk more, contact TWAICE and ask about our Battery Analytics Software today!
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