Advancing Second-Life Lithium-Ion Batteries for a Circular Energy Economy through Diagnostic Economic and Policy Pathways

The increasing deployment of Electric Vehicles (EVs) and renewable energy systems is leading to a rapid growth of Lithium-Ion Batteries (LIBs) reaching the end of their first life, thereby highlighting the importance of second-life applications within a circular energy framework. Our paper evaluates the techno-economic, environmental, and regulatory dimensions shaping large-scale adoption of Second-Life Batteries (SLBs). We synthesize recent advances in diagnostic methodologies including electrochemical analysis, machine learning based state-of-health estimation, and emerging digital twin and battery passport frameworks that enable accurate classification, safety assurance, and lifecycle traceability of repurposed cells. Techno-economic assessments underscore substantial cost reductions, improved return on investment, and reduced dependence on critical raw materials. Environmental analyses show significant mitigation of e-waste and greenhouse gas emissions, alongside enhanced integration of intermittent renewables. Application domains spanning grid-scale storage, microgrids, residential systems, and EVs charging buffers demonstrate increasing commercial viability. Persisting challenges include heterogeneous battery conditions, lack of global standards, and uncertain secondary-market valuation. A future roadmap outlines integrated diagnostic, regulatory, and business-model innovations needed to industrialize SLBs and enable a fully circular battery value chain.