Technical and Economic Evaluation of Battery Storage Arbitrage in Turkey’s Electricity Market: Integrating Battery Degradation and Circular Supply-Chain Constraints

The accelerating transition to electric mobility is generating a growing volume of retired EV batteries with considerable residual capacity. These batteries offer a strategic resource for more sustainable stationary BESS deployment through second-life valorization. However, extant techno-economic frameworks frequently rely on idealized assumptions, overlooking degradation trajectories and circular supply-chain constraints that are essential to a genuinely sustainable assessment. This study is an extension of a baseline model that demonstrates the feasibility of BESS for arbitrage in the Turkish electricity market, which is subject to fluctuations. The model is expanded to incorporate a more sustainability-conscious evaluation of the long-term viability of storage. This model captures pronounced seasonal price volatility to generate approximately $89,179 in augmented annual revenue. The study presents a comprehensive evaluation of new (first-life) and repurposed (second-life) EV battery systems. The incorporation of real-world degradation and supply-chain limits reveals that operational constraints significantly erode theoretical grid-connected profitability (reducing baseline Net Present Value (NPV) by up to 78%), particularly for the first-life system. Nevertheless, second-life BESS (SL-BESS) demonstrates superior financial performance. Despite exhibiting a lower round-trip efficiency (a constant 80%, versus the first-life system’s initial 85%), requiring higher maintenance costs, and offering a shorter lifespan (7 years), the SL-BESS achieves an NPV of $81,219 and an Internal Rate of Return (IRR) of 22.8%, outperforming the first-life system (NPV: $66,490; IRR: 14.8%). This performance discrepancy is attributable to a 40% reduction in initial capital expenditure, which subsequently leads to an estimated 11.3% reduction in the Normalized Cost-to-Revenue Ratio (CRR, serving as a dimensionless financial proxy for LCOS). Sensitivity analysis highlights the significant influence of battery chemistry; substituting the baseline Lithium Iron Phosphate (LFP) cells with nickel-based chemistries accelerates capacity fade, consistent with well-documented chemistry-dependent degradation patterns (e.g., ~4000–5000 cycles for NMC versus 5000–8000 cycles for LFP before reaching 80% remaining capacity, with NCA assumed equivalent to NMC). This substitution reduces the project NPV by $11,000 to $19,000 in the model. Finally, the study highlights that widespread commercialization of SL-BESS requires overcoming information asymmetry through traceability mechanisms (e.g., Battery Passports) and transitioning to service-oriented models (e.g., Battery-as-a-Service). These findings indicate that adopting circular business models is not only environmentally beneficial but also financially necessary for second-life storage to scale.