By Nichola Groom

(Reuters) - Hundreds of used electric vehicle battery packs are enjoying a second life at a California facility connected to the state's power grid, according to a company pioneering technology it says will dramatically lower the cost of storing carbon-free energy.

B2U Storage Solutions Inc, a Los Angeles-based startup, said it has 25 megawatt-hours of storage capacity made up of 1,300 former EV batteries tied to a solar energy facility in Lancaster, California. The project is believed to be the first of its kind selling power into a wholesale market and earned $1 million last year, according to Chief Executive Freeman Hall.

Though the technology is nascent, grid-scale storage provides a useful destination for the millions of used battery packs that will come from the transition to electrified transportation in the coming years. It is also a more cost-effective way to deploy the massive amounts of battery capacity needed to store solar and wind energy for when the sun is not shining or the wind is not blowing.

B2U's technology allows the EV battery packs to be bundled together without having to be taken apart first. Founded in 2019, the company is backed by Japanese trading company Marubeni Corp.

By extending the batteries' lives, project developers can save both resources and costs. Hall estimates that a system like B2U's could lower grid-scale battery capital costs by about 40%.

"Second life and re-use helps the overall lifecycle be more energy efficient, given all the efforts that go into making that battery," Hall said in an interview. "So you're getting maximum value out of it."

Batteries are worked hard during their years powering vehicles, and over time their range deteriorates. But they still hold value as stationary storage, which has gentler demands, Hall said.

The batteries in the B2U system are up to 8-years old and once powered vehicles built by Honda and Nissan.

The company is seeking to develop additional projects in California and Texas.

(Reporting by Nichola Groom; Editing by Marguerita Choy)

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