Cost-optimal renewable microgrids with second-life EV batteries: evidence from Puglia, Italy

This study presents a comparative assessment of four microgrid configurations for rural communities in Southern Italy, with Puglia as a representative case. Using a scenario-based techno-economic model combining MATLAB R2024a and Python 3.12.7 simulations, the analysis evaluates systems based on second-life electric vehicle (EV) batteries, new lithium-ion batteries, and diesel-dominated setups, focusing on economic performance, environmental impact, and renewable integration potential. The results show that storage technology selection critically shapes both cost-effectiveness and sustainability outcomes. Second-life EV batteries emerge as the most balanced option, combining affordability and environmental benefits. These systems enable renewable penetration above 90% while maintaining a levelized cost of storage (LCOS) of EUR 0.12/kWh. Over a 20-year horizon, they achieve a positive net present value (NPV), with annual diesel consumption reduced to just 3200 l, significantly cutting greenhouse gas emissions. This highlights the potential of circular economy strategies, such as battery repurposing, to support low-carbon rural energy transitions. New lithium-ion batteries offer slightly higher technical performance, but their competitiveness is limited without policy support. The LCOS rises to EUR 0.18/kWh, reducing financial attractiveness despite marginal improvements in loss of load probability and lower diesel reliance. Premium storage technologies may therefore be most suitable where reliability is paramount and subsidies are available. By contrast, the diesel-dominated scenario illustrates the economic and environmental costs of fossil dependency. It consumes nearly 28,000 L of fuel annually, produces ~90 tons of carbon dioxide (tCO2) emissions, and achieves only 48% renewable penetration, resulting in a strongly negative NPV. Overall, the findings confirm that second-life EV batteries provide a practical, sustainable, and cost-effective pathway for rural electrification in Southern Italy and comparable Mediterranean regions. Realizing their potential will require supportive policies for battery reuse, safety, and recycling infrastructure.