Degradation-aware energy management system for second-life batteries in isolated microgrids

Accelerating decarbonization commitments are driving the deployment of renewable-dominant microgrids (MG) to extend reliable, affordable, and clean electricity to remote areas. In power systems with high renewable energy sources penetration, variability in photovoltaic generation (PV) makes energy storage a pivotal resource; this role becomes particularly critical in islanded operation, where its lifetime economics hinge on how battery degradation is modeled inside the Energy Management System (EMS). Second-life batteries (SLB) offer a promising, lower-cost, circular-economy option for stationary storage; however, their heterogeneous aging histories complicate Remaining Useful Life (RUL) estimation and operational planning. This paper presents the development and theoretical implementation of a degradation model for an SLB pack in an isolated MG EMS. The system comprised a PV system, diesel generator, and SLB. An empirical degradation model of SLBs was incorporated into the EMS objective function and compared with a linear model. The empirical model was refined using two additional factors: one to represent thermal heterogeneity at the module level and the other to capture calendar aging and the effect of the average state of charge. The results show that the choice of degradation model directly impacts the costs, dispatch strategy, and estimation of the remaining useful life. Furthermore, it was determined that temperature and internal thermal gradients are the most decisive external factors in the degradation of stationary systems. Finally, it was concluded that SLBs can operate between 6.9 and 11.3 years (equivalent to 2520–4114 full cycles), depending on the severity of the operating conditions and model parameterization. • Energy management system for microgrids with second-life batteries (SLB). • Economic dispatch formulation with degradation model of SLB. • Technical and economic viability of SBL applied to microgrids. • Thermal heterogeneity, average state of charge, and aging calendar improved degradation model. • Temperature and intra-module thermal gradients relevant aspects for SLB.