Degradation-Aware Operation of Second-Life BESS as a Sequential Decision Making Problem

Increasing grid flexibility and rapid growth of electric vehicles have highlighted opportunities for second-life battery applications. This paper investigates battery arbitrage and degradation management incorporating detailed calendar and cyclic degradation models. A battery energy storage system is modeled to optimize participation in day-ahead and intraday electricity markets, accounting explicitly for aging costs and efficiency losses. Results indicate that second-life batteries (90% and 80% state-of-health) achieve higher net revenues (up to 6.6% more) than new batteries due to lower cycling costs, particularly under favorable market conditions. These findings underscore the economic viability and operational advantages of integrating second-life batteries into energy markets.