Technology and Capacity Planning For The Recycling of Li-Ion EV Batteries in Germany

J Bus Econ (2015) 85:505–544
DOI 10.1007/s11573-014-0744-2
RESEARCH ARTICLE
Technology and capacity planning for the recycling

of lithium-ion electric vehicle batteries in Germany
Claas Hoyer • Karsten Kieckhäfer •
Thomas S. Spengler
Published online: 4 September 2014

Springer-Verlag Berlin Heidelberg 2014
Abstract Currently, the German government strives for establishing Germany as

a lead market for electric mobility. A successful growth of the electric vehicle
market would be followed by a corresponding volume of spent lithium-ion bat-
teries containing valuable and scarce metals. With their recycling, the high
environmental load and energy use of primary production could be reduced,
import dependencies could be diminished, and economic value could be created.
Pioneering the mandatory deployment of an appropriate recycling network in
Germany, the aim of this paper is to determine investment plans for the instal-
lation of recycling plants of different technologies and capacities and to derive
recommendations for potential investors. For this purpose, a mathematical opti-
misation model is developed, allowing the economic selection of recycling
technologies and capacities to be deployed in the network over time. In a com-
prehensive study, the impact of uncertain developments and mandatory minimum
recycling rates on the timing of plant installations, on technology and capacity
selection, on material flows, and on the profitability of recycling are analysed. The
main finding is that despite the prevailing uncertainties a robust plan exists at least
for initial decisions. It is shown that the recycling network can be operated highly
economically in four out of five scenarios while meeting mandatory minimum
recycling rates easily. By contrast, achieving both profitability and the minimum
C. Hoyer (&) K. Kieckhäfer T. S. Spengler

Institute of Automotive Management and Industrial Production, Technische Universität
Braunschweig, Katharinenstr. 3, 38106 Braunschweig, Germany
e-mail: claas.hoyer@tu-braunschweig.de
URL: http://www.tu-braunschweig.de/aip/prodlog/personal/hoyer
K. Kieckhäfer
e-mail: k.kieckhaefer@tu-braunschweig.de
URL: http://www.tu-braunschweig.de/aip/prodlog/personal/kieckhaefer
T. S. Spengler
e-mail: t.spengler@tu-braunschweig.de
URL: http://www.tu-braunschweig.de/aip/prodlog/personal/leiter
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recycling rates will be a challenge if less valuable metals are used in the pro-
duction of batteries, requiring the development of additional recycling steps to
both reduce waste and increase profitability.
Keywords Strategic network design Reverse logistics Recycling Lithium-ion

batteries
JEL Classification M11 K32 C61
1 Introduction
Based on the objective of the German Bundesregierung, a stock of one million

passenger cars with electric propulsion and with the ability to charge from the
electricity grid should be reached until 2020 (German Federal Government 2009,
pp. 43–44). A realisation of the German federal government’s plans would imply
more than one hundred thousand tons of spent lithium-ion traction batteries
accumulating until 2025 (Hoyer et al. 2011b, p. 413). Faced with that, politics as
well as battery and automotive manufacturers have to develop concepts that ensure
a sustainable recycling management for the batteries already today, being obliged
by the EU directive 2006/66/EC and its translation into German law, the
Batteriegesetz. According to these regulations, spent batteries have to be reused
primarily and recycled secondarily; recycling processes must be able to recover at
least 50 % of the battery mass (hereafter referred to as ‘‘minimum recycling rate’’).
Because of the large amounts of non-ferrous metals like lithium, cobalt, nickel,
manganese, and copper contained in spent lithium-ion traction batteries, their
recycling promises economic as well as ecological potential. The lithium and cobalt
deposits exploited today are geologically concentrated, which could lead to a
situation of strong dependency on a few producing countries for Germany as well as
for other European states. Moreover, a strong demand for the metals caused by a fast
growth of the electric-vehicle market will most certainly result in a strong price
increase. Planning and implementation times of several years for capacity
expansions or artificial scarcity could amplify this effect. Hence, providing a
secondary feedstock for the domestic battery and automotive industry can ensure
supply, reduce import dependency, and counteract price volatility. From a global
perspective, reserves of raw materials are spared and environmental load is reduced
since the secondary production of metals generally requires less energy and emits
much less pollutants than mining and refining metals.
Up to now, neither mature processes nor facilities exist that could ensure a
feedback and a treatment of the batteries to recover the valuable materials and to
achieve the minimum recycling rate. Established recycling networks, e.g. those for
end-of-life vehicles, lead-acid batteries, and electric equipment, are not designed for
the treatment of large volumes of the technically complex traction batteries in terms
of structure and capacity. However, in the last few years, several projects have been
established in Germany that conducted research on new recycling technologies, e.g.
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Technology and capacity planning for the recycling of lithium-ion 507
LiBRI and LithoRec. In LithoRec II, a consortium of automotive, battery, and

machine manufacturers as well as recyclers, companies of the commodity industry,
and university partners develops a pilot plant for their technology, intending to
establish a comprehensive, co-operative network for the recycling of batteries in the
long-term (Kwade and Bärwaldt 2012).
Planning such a recycling network is especially challenging due to the early
development stages of the electric-vehicle market and the battery technology, the
uncertain future metal prices, and the recycling processes that are currently being
developed. The growing market for electric vehicles and the uncertain length of the
useful life of the batteries result in an uncertain and dynamic future volume of spent
batteries. Moreover, it is unclear which variant of the lithium-ion battery technology
will become prevalent. The variants differ in the metals contained, whose market
prices in turn have been very volatile in recent years. Recycling technologies are
still under research, so that the capital investment and other financial key figures of
recycling facilities can only be estimated roughly.
Considering this high level of uncertainty and the aim to establish a recycling
network early, it becomes obvious that decisions with regard to the necessary
investments have to be made in such a way that favourable financial results can be
achieved for investors under a wide range of possible future developments. Due to
their typically high initial expenses and their short-term irreversibility, the
investments in the required recycling plants are in the centre of attention. Thus,
the question arises which recycling technologies should be established in what
capacity at what times, depending on the volume of spent batteries, the prevalent
lithium-ion technology, future metal prices, and the initial investment and fixed
expenses of the recycling technologies. Beyond that, investors will be interested in
the question to what extent the minimum recycling rate influences these decisions.
Against this background, the aim of this paper is to determine investment plans
for the deployment of recycling plants in a recycling network for lithium-ion
traction batteries in Germany and to derive recommendations for potential investors.
Each investment plan should depict that programme of investments in recycling
plants of a specific technology and capacity that is economically optimal given a
supposed future development. Uncertainties associated with these developments are
represented by different market and technology development scenarios. Based on
these scenarios, impacts of both uncertain developments and the minimum recycling
rate on the timing of plant installations, the selection of technologies and capacities,
the material flows, and the profitability of the recycling are analysed and
recommendations for technology and capacity planning are derived. Further, the
results are transferred to the level of individual actors and consequences for the
organisation of the network are discussed.
For the determination of scenario-specific optimal investment plans, a mathe-
matical optimisation model is developed and applied. In the model, the viewpoint of
a central ideal decision-maker is adopted, who is referred to as the ‘‘potential
investor’’. This potential investor can be understood as a conglomerate of actors in a
reverse supply-chain, such as producers, logistics service providers, and recycling
companies, jointly carrying out the collection and treatment of a certain waste. The
model allows generating optimal plans for co-operative networks, while
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implications can be revealed on actor level by analysing the resulting structures and
cash flows in the network.
The model features two distinct characteristics in reverse supply-chain planning.
First is its concentration on dynamic developments. Cost-based optimisation of a
single, representative period is a very common approach in the field of reverse
logistics. However, it is inaccurate due to the usage of average values and it dismisses
the heterogeneity of cash flows over time that is typical for investment projects,
entailing the risk of misestimating the profitability of projects and of drawing wrong
conclusions. The approach chosen explicitly allows for the consideration of dynamics
in price and quantity structures by optimising discounted cash flows. The second
characteristic is the modelling of production processes and material transformations
by means of linear activity analysis. Existing approaches usually focus on location
decisions (see e.g. Melo et al. 2009 for a review). To reduce model complexity, not
only dynamic developments, but also details of processes and products are omitted.
Decisions on technologies are either excluded or simplified, e.g. by considering
multiple technologies in a single plant and size. As a result, decoupling possibilities
are ignored, which could suppress profitable upstream technologies. Further, the
option of treating distinct products differently, i. e. deciding on the recycling depth of
products depending on their value to use plant capacities efficiently, is frequently
neglected. By contrast, the developed model depicts multi-stage co-production
processes with alternative technologies in different sizes as well as product variants,
intermediates, supplies, recyclables, and residues. Instead, it simplifies locational
decisions, which are rather unimportant in the given case.
The paper is structured as follows: Recycling processes and planning tasks for a
recycling network as well as the relevant literature are addressed in Sect. 2. In Sect.
3, the concept of the model for technology and capacity planning in recycling
networks and its implementation in a standard software is introduced. The model is
parameterised and applied in Sect. 4 to answer the research questions postulated.
The approach is discussed with regard to its advantages, limitations, and
applicability to other planning situations in Sect. 5.
2 General conditions and planning tasks for the recycling of lithium-ion

batteries
2.1 Recycling processes for lithium-ion batteries from electric vehicles
A recycling process for spent lithium-ion batteries from electric vehicles can be
classified into a sequence of collection, selection, treatment, disposal, and
distribution activities, aiming at the recovery of valuable materials from the
batteries (Fleischmann et al. 2000, pp. 657f). The process begins with the collection
of batteries from vehicle service stations, where spent batteries are exchanged with
new batteries, or from facilities for the treatment of end-of-life vehicles, where the
spent batteries are extracted from old cars (Hoyer et al. 2013, pp. 543f.). Collection
should take place immediately to prevent mistreatment and to allow for proper
storage. Subsequently, the batteries are inspected, checked regarding their
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condition, sorted into those for treatment and those for disposal, and stored. The
treatment aims at the recovery of valuable materials or the removal of hazardous
substances from the batteries. Decisions about disposal may concern both batteries
and intermediates such as cells. For disposal, opportunities outside of the system’s
boundaries are frequently available, namely thermal utilisation, incineration, or
landfill. The step of distribution refers to the divergent transport activities of
delivering the recovered materials and the undesired residues to the sinks of the
networks (e.g. metal stock exchanges or refineries).
For the treatment of the batteries, several technologies in various combinations
can be applied. These technologies are usually multi-stage co-production processes.
They embrace both manual and automatic disassembly steps as well as mechanical,
pyrometallurgical, and hydrometallurgical conditioning steps (Hoyer et al. 2011a,
p. 81). With each technology, different components and materials in different
quality grades can be recovered. The volume and the type of materials that can be
recovered from lithium-ion batteries differ widely between available battery
variants. Variants of the batteries mainly result from the vehicle type they are used
in and the principal battery technology. Conditional on the vehicle type and its
requirements on electrical power and energy, a battery may weigh 30–350 kg.
Different battery technologies result from the composition of the active material.
Some active materials (e.g. lithium nickel manganese cobalt oxide, NMC) contain
particularly valuable metals like cobalt and nickel that make recycling appear very
attractive. Nevertheless, the high prices of suchlike metals are an important reason
for substituting them by less valuable materials, e.g. manganese (Gaines and Cuenca
2000, p. 11). In the active material lithium iron phosphate (LFP) the only precious
metal left is lithium.
A promising recycling process to exploit the full potential of a circular economy
was developed in the German research project LithoRec (Kwade and Bärwaldt
2012). The LithoRec process aims at an economically viable and ecologically
compatible recycling of lithium-ion batteries from electric vehicles. It comprises
three subsequent recycling steps: disassembly, mechanical conditioning, and
hydrometallurgical conditioning. After discharge, the batteries are disassembled
to cell level. In addition to the cells, reusable or recyclable components and parts
like electronics or electronic conductors are recovered. In mechanical conditioning,
the batteries are shredded. Volatile organic matter (electrolyte with conducting salt)
is separated for disposal. The coarse-grained fraction is further grinded, screened,
and sorted. Amongst others, aluminium, copper, and cathode coating fractions are
recovered. Subsequently, in hydrometallurgical conditioning, the cathode coating
containing the active material is conditioned with various electro-chemical
processes to regain lithium for a direct reuse in active material production.
2.2 Planning tasks for establishing a recycling network for lithium-ion traction
batteries
To establish a recycling network for spent lithium-ion batteries from electric

vehicles, decisions concerning the specific design of the network have to be made.
The design embraces the complete recycling process, from the collection of the
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batteries to the redistribution of recyclables. Strategic planning tasks particularly

include the selection of locations for collection and treatment facilities, the selection
of technologies to be deployed, the selection of capacities to be installed over time,
and the identification and selection of actors to be involved in the network (Hoyer
et al. 2011a, p. 83).
The selection of locations is a decisive economic factor, especially with regard to
the collection of the batteries. The large and heavy batteries are classified as
dangerous goods and are subject to high safety requirements. Thus, the transport
routes to the treatment facilities have to be kept as short as possible to avoid costly
transport. This is why, with an increasing amount of spent batteries, a decentrali-
sation of the collection is required. The selection of the recycling technologies not
only determines the quantity and quality of materials that can be recovered from a
specific battery variant, but also the residues that have to be disposed of, and
therefore influences the economic success of recycling considerably. Moreover,
certain technologies may rely on previous conditioning steps. For example, a
mechanical or pyrometallurgical conditioning of cells usually cannot be performed
without previous (partial) disassembly of the batteries. Some technologies might be
optional, so that in addition to the further treatment of intermediates, their disposal
must be taken into consideration. The selection of a capacity strategy is of great
importance given the dynamic and uncertain development of the volume of spent
batteries on the one hand and possible economies of scale on the other hand. Here,
the utilisation of economies-of-scale effects by an early installation of large
facilities contradicts the reduction of financial and technologic risks with a
sequential installation of smaller facilities.
These extensive planning tasks are further complicated by the identification and
selection of actors required in the network. Automotive manufacturers are obliged
to ensure that every battery returned by end-users, vehicle dealers, and end-of-life
vehicle treatment operators is collected and properly recycled. As this is out of their
core competence, they can transfer obligations to various actors, who would take-
back, collect, disassemble, and recycle the spent batteries. From the perspective of
the manufacturers, this must be carried out in a cost-minimising or profit-
maximising manner. For that, they can choose partners and corporation models that
enable efficient collection and recycling, and they can share fixed costs and use
economies of scale by jointly operating a cross-producer network.
Potential partners in the network include vehicle dealers, vehicle treatment
operators, reverse logistics providers, recyclers, battery material producers, and
metal producers. Vehicle dealers, who may be involved due to the replacement of
defective and spent batteries, will be interested in an easy and free-of-charge
solution for the redistribution of spent battery, most likely without wanting to
participate in the network. The same is true for vehicle treatment operators. Vehicle
dealers and treatment operators will most likely sell the battery to the best-paying
recycler in case of a competition of recyclers. Even though manufacturers are then
freed from their obligations, some manufacturers currently try to prohibit this to
benefit from a potential salvage value or to prevent misuse in a secondary market
that could damage corporate reputation, e.g. by contracts or by letting the battery on
a lease.
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Reverse logistics providers, who typically embrace logistics service providers as

well as recyclers, are decisive for automotive manufacturers as they control and
organise take-back, collection, and recycling. Recyclers, battery material producers,
and metal producers are interested in the recovery of materials (predominantly
metals). These actors and their specific competences are required to achieve the
mandatory rates. This knowledge harbours the particular threat of a blackmail
situation for the manufacturer. The partners in the chain, beginning with the last
one, could charge the preceding partners for treating intermediate products, ending
in a reel-off and in an addition of different treatment fees up to the manufacturer.
Nonetheless, as can be observed within existing collaborations and particularly in
LithoRec, recyclers are frequently interested in long-term economic success through
collaborative partnerships rather than in short-term profits. Therefore, the selection
of actors will be a question of the willingness to co-operate and of setting the right
incentives. In Germany, recyclers are most often small- and medium-sized
companies. Investments into new, specialised recycling plants for lithium-ion
batteries could easily exceed their financial possibilities. This requires appropriate
co-operation models like joint ventures with financially stronger partners, possibly
including manufacturers.
The planning tasks described above are characterised by various interdependen-
cies. The selection of a technology is directly dependent on the decision for or
against the actor who provides it. Further, the recycling technologies differ
significantly with respect to reasonable magnitudes of the corresponding facilities
and to the economies of scale associated with the initial investment and the
operating expenses. To give an example, manual disassembly could be conducted in
small business with less than ten employees, while smelters are only efficient in
magnitudes of ten thousands of tons of capacity and in continuous operation.
Likewise, the technology and capacity planning depends on the planning of
locations due to different extents of economies of scale and technology-specific
location factors. Hence, the decisions on actors, locations, technologies, and
capacities cannot be made independently.
In order to make strategic decisions on the deployment of technologies and
capacities, tactical planning tasks must be included insofar as they affect the cash
flows from the resulting material flows. Particularly relevant decisions are those
about the volume and the mix of spent batteries that are to be collected and treated,
as well as about the recycling steps that are to be performed for individual battery
variants. They include the allocation of material flows to the facilities and the
decision to remove a share of intermediate products if the capacities are not
sufficient or a downstream recycling technology is not yet deployed. For this
purpose, a forecast of the volume and mix of spent batteries and the materials
contained in them is required.
2.3 Literature on strategic planning of product recovery networks
In the 1990’s, European legislation for the first time broadly forced producers to
take-back their waste products from customers and recover them. Simultaneously,
the growing ecological awareness of customers as well as economic potential
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encouraged producers to deal with product recovery (Fleischmann et al. 1997,

pp. 2f). The management of product recovery was a new task for many companies
and gave room for academic research. In 1995, Thierry et al. introduced the term
‘‘product recovery management’’, which ‘‘encompasses the management of all used
and discarded products, components, and materials that fall under the responsibility
of a manufacturing company’’ (Thierry et al. 1995, p. 114). The research stream that
focusses on the physical flow of spent products for recovery is since then commonly
known under the term ‘‘reverse logistics’’, which is the ‘‘process of planning,
implementing and controlling backward flows of raw materials, in process
inventory, packaging and finished goods, from a manufacturing, distribution or
use point, to a point of recovery or point of proper disposal’’ (de Brito and Dekker
2004, p. 5).
For an overview over the broad literature on reverse logistics (including similar
topics like closed-loop supply chain management and integrated chain manage-
ment), we refer to the latest reviews of (Pokharel and Mutha 2009), (Sasikumar and
Kannan 2009), (Melo et al. 2009), and (Rubio et al. 2008). These identified between
151 and 543 published articles regarding reverse logistics aspects. Yet, only a
minority of those articles following optimisation approaches address strategic
planning tasks, and only a few of these are on recycling. (Rubio et al. 2008) made
out three directions of research within the strategic planning horizon. In the first one,
the focus is on the optimal design of networks (e.g. locations of facilities). In the
second one, the planning of production capacities is of primary interest. The
literature in the third one particularly analyses the coordination of multiple decision
makers in networks (e.g. contracts and auctions).
In line with that, for the planning of product recovery networks, two different
approaches can be made out. The first one is to take a comprehensive perspective on
the reverse supply chain or even the industry as a whole to derive optimal solutions
for the system under consideration. Most network-design models pursue this idea
implicitly or explicitly. Good examples with planning issues similar to the given
case are (Barros et al. 1998), (Shih 2001), (Schultmann et al. 2003), (Achillas et al.
2010), and (Dat et al. 2012). (Barros et al. 1998) develop a model for planning a
recycling network for sand from construction waste. The model optimises the flow
of sand, originating from sieved-sand sources, over depots, where it is sorted into
clean, half-clean, and polluted sand, to project sites. While clean and half-clean sand
are directly transported to the project sites, polluted sand is brought to treatment
sites previously. The model decides on the number of depots and treatment sites out
of a set of potential locations. All sand must be collected, all polluted sand must be
treated, and all demand of the project sites must be fulfilled. Storage of clean and
half-clean sand in the depots is allowed as far as it does not exceed the capacity
installed. (Schultmann et al. 2003) address the recycling of portable batteries in
Germany. Presuming that efforts for establishing closed-loop concepts lead to an
increase of the return rate of batteries in the existing joint take-back system, their
model selects locations and capacities of additional sorting facilities and allocates
transports between sources, sorting facilities, and recycling or disposal sites. All
returned batteries must be collected. In (Shih 2001), a model is developed for
designing a recycling network for computers and home appliances. The model
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optimises the flow of different products from existing collecting points over storage
sites and disassembly facilities to final treatment sites. It further decides on the
installation of storage sites, disassembly facilities, and final treatment sites out of a
given set of potential locations. Again, this model is completely return-driven; all
products and materials must be treated in both treatment stages, disposal is not
allowed. The model shall serve authorities in Taiwan as a basis for the approval of
new facilities. Similar to that, (Achillas et al. 2010) as well as (Dat et al. 2012)
present models for planning recycling networks. The former model focusses on
transportation and storage between collection points and treatment facilities and
decides on the opening of storage facilities only. The latter model also considers
disposal, recycling, repair, and reuse options. While it decides on the installation of
corresponding facilities, it does not select the most economic recovery option for
every product or component, but this allocation is pre-set.
In the majority of practical cases, the overall optimum would not automatically
mean optimum outcome for the individual actor. Accordingly, the second approach
in the planning of product recovery networks is to look at individual actors in the
supply chain and analyse inter-organisational issues or find out mechanisms helping
in an environment of distributed decision-making to achieve solutions that come as
close as possible to the supply-chain optimum. Examples are revenue sharing to
induce higher return rates for used products in a manufacturer-retailer relationship
(Mafakheri and Nasiri 2013), two-part tariffs to achieve optimal collection rates and
order lots in a supplier–buyer environment (Dobos et al. 2013), and automatic
negotiation of contracts between one focal company and several other companies in
a recycling network to achieve optimal allocation of products for recycling on the
actors in the network (Walther et al. 2008).
For the planning of lithium-ion battery recycling, both approaches are justifiable.
We take up the supply-chain perspective as we want to gain knowledge about
sustainable solutions that enable nation-wide recycling. This perspective allows us
to evaluate whether mandatory rates can be achieved economically with the given
technologies and which technologies should be chosen under perfect organisational
conditions. If single technologies or even whole systems were not profitable in this
perspective, by implication, they would not be under less attractive conditions.
Optimal solutions derived in this perspective can then serve as a benchmark for the
implementation of the network. This approach is further supported by the fact that
legislation requires the mandatory recycling rate to be achieved by the whole system
on national level and to be proven by the state (as opposed to individual actors).
Hence, in our approach, the viewpoint of a central ideal decision maker is adopted.
Questions like the allocation of tasks to the different actors as well as price setting in
a competition of recyclers are therefore neglected, assuming a perfectly coordinated
(reverse) supply chain in a co-operation of vehicle producers and other actors. Yet,
in our recommendations, we will take a deeper look at individual actors.
Existing models in the field of reverse logistics show two major restrictions that
make them inapplicable for planning a recycling network in our specific setting, as
indicated by the discussion of exemplary models above. Firstly, to the authors’
knowledge, all of the models concentrate on location decisions, which results in
complex mathematic problems and comes to the cost of neglecting other important
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details. In particular, technical processes are usually modelled on an aggregated

level to reduce complexity. This is unrewarding in the case on hand, where some
recycling technologies are optional and differ in the required supplies as well as the
intermediates, recyclables, and disposals resulting from different battery variants.
Accordingly, material flows of the processes and different product must be modelled
explicitly, such that technological decisions on multiple stages can be addressed to
assess the optimal configuration of the complete recycling process. Models
originating from the planning of (forward) production networks like (Paquet et al.
2004), (Hübner 2007), and (Walther et al. 2012) give good examples, using directed
graphs, transformation coefficients, or activity analysis to depict material flow and
multiple products. At the same time, decentralisation effects must not be dismissed
as they have a great impact on costs of collection. The exact allocation of locations
seems to be out of scope due to the high uncertainty in this early planning phase, and
since location decisions are usually based on a mix of qualitative, company-specific,
and even subjective criteria, the planning of technologies and capacities is much
more important in a first step. This planning can be the basis for a later, detailed
planning of locations when a higher and more certain volume of spent batteries
realises. Secondly, only few approaches consider dynamic developments, and even
less make use of elaborate methods for proper economic assessment. Adducing a
representative period and assessing the economics of the system by using average
costs and revenues may be sufficient if dynamics are low and can be neglected. In
the given case, early and high investment expenses for the erection of new facilities
face a suspected dynamic growth of battery return, leading to a very heterogeneous
distribution of cash flows in the planning horizon. Accordingly, there is no
‘‘representative period’’, and the consideration of only one period would lead to
inaccurate or even incorrect recommendations as neither the possibility of a
sequential installation of capacities nor the timing of cash flows caused by these
dynamic developments would be reproduced. Again, good examples can be found in
forward supply-chain planning, as in (Kelly and Marucheck 1984), (Fleischmann
et al. 2006), and (Walther et al. 2012), who use multi-period models and/or the net-
present value approach.
Due to the restrictions of existing models, a specific model is required for the
given problem. In the following chapter, a detailed concept of an optimisation
model is presented.
3 Development of a model for technology and capacity planning in recycling

networks
3.1 Concept of the model
In order to determine efficient investment plans with regard to the number of

recycling plants of specific technology and capacity to be operated in the recycling
network, a mathematical optimisation model was developed (see ‘‘Appendix’’). Its
concept is illustrated in Fig. 1. The model depicts both strategic decisions (the
investment plan) and tactical decisions (the recycling programme plan) during the
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Fig. 1 Concept of the optimisation model for technology and capacity planning in recycling networks
planning horizon. This planning horizon T is separated into discrete periods t (e.g.
years) to allow for dynamic developments and a better depiction of profit
orientation.
The investment plan delivers the number of so-called modules that should be
operated in each period. Each module represents a specific recycling technology in a
specific capacity class. At the beginning of each planning period, modules may be
installed in unlimited number. At the end of a period, previously installed modules
may be deactivated and liquidated. A minimum operating time may be pre-set for a
module, restricting the time of deactivation. The recycling programme plan
determines the volume and mix of products and intermediates to be treated in each
module and period, and quantifies the required supplies, the recovered recyclables,
and the resulting residues.
To consider profit orientation, the economic evaluation is done by maximising
the net present value that results from the discounted cash flows in the planning
horizon. Periodic payments resulting from the investment and recycling programme
decisions are discounted with a given interest rate. Furthermore, an assessment is
made using the internal rate of return and the discounted payback-period method.
On the one hand, cash flows include investment expenses, liquidation revenues, and
fixed facility-operation expenses that are defined for each type of module, and
variable operation expenses that are further dependent on the product or
intermediate processed in a module. By pre-setting different values for these
parameters for different capacity classes, economies-of-scale effects are taken into
account. On the other hand, cash flows comprise expenses and revenues related to
the flow of materials and energy to, between, and from the modules. These are
expenses for transportation, purchase, and disposal, and revenues from the sale of
materials and energy. Transportation expenses occur in both the collection of
products and the shipment of intermediates between modules.
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Decentralisation effects are considered in the collection of products. In difference

to common network planning models, this is done without deciding on specific
locations. For that, the set of available modules is divided into ‘‘collecting modules’’
and ‘‘non-collecting modules’’, with only collecting modules being able to collect
products. A product-specific, piecewise linear cost function is used that makes the
variable collection costs conditional on the number of installed collecting modules,
so that higher numbers of installed modules lead to declining collection costs. The
corresponding data for the collection cost levels i 2 I has to be delivered by
estimates or empirical studies. For the implementation of the piecewise linear cost
function, an auxiliary binary variable is required that selects the appropriate cost
level in each period for each product (‘‘cost level selection variable’’).
For the modelling of process material flow and multiple products, the linear
activity analysis of (Koopmanns 1951) and (Debreu 1959) is chosen. In linear
activity analysis, processes are expressed as a combination of activities. For each
product that can be treated in a specific process, an activity describes the flow of
input and output factors in form of an activity vector. Intermediates (e.g. accruing in
disassembly) are output of one activity and input to another. This approach enables
an easy and very flexible model formulation of material flow and a level of
aggregation of empirical process data (e.g. material and energy balance sheets) that
is adequate considering the long-term planning horizon.
The concept for modelling the material and energy flow and multiple products is
based on (Spengler and Rentz 1996; Spengler et al. 1997), where linear
activity analysis is used in mixed-integer optimisation models for integrated
disassembly and recycling planning, and (Walther and Spengler 2005), where this
modelling approach is extended by transportation processes. The concept is depicted
in Fig. 2 for the three subsequent LithoRec technologies disassembly, mechanical
conditioning, and hydrometallurgical conditioning. For sake of simplicity, these
technologies are only displayed for one ‘‘small’’ capacity class. Thus, three modules
are resulting, called ‘‘D1’’, ‘‘M1’’, and ‘‘H1’’. Aggregate flows are shown instead of
using dedicated arrows for each type of material and energy. More generally, the
material and energy flow in a period t is depicted by the following decision variables
(emphasised):
• yin
t;m;f : volume of input factors f , namely products for recycling (f 2 FP ) and
supply factors (f 2 FS ) acquired from the system’s sources and processed by the
modules m,
• yship
t;m;f ;m0
: amount of intermediates f 2 FM shipped between any module m and
0
another module m , and
• yout
t;m;f : the volume of output factors f (recyclables f 2 FR , residues f 2 FD , or
intermediates f 2 FM for disposal) that are produced by a module m and sold or
disposed of at sinks outside of the system.
The material and energy flow is determined by the transformations of products

and intermediates that are executed in the modules. These transformations are
123
Fig. 2 Material and energy flow in the recycling network
depicted by activity analysis. The transformation executed by an activity a 2 A in a

module m is represented by module-specific activity vectors (vm;a ), containing
activity coefficients (vm;a;f ) for every factor. If a module m is able to treat different
products or intermediates, or to treat the same product or intermediate in various
ways, a specific activity vector has to be given for each option. The vector must be
normalised to the product or intermediate treated, represented as ‘‘-1’’. The
decision variable kt;m;a represents the number of executions of an activity a in the
module m and, thus, the intensity of production. The physics of the material and
energy flow and of the transformations are mathematically implemented using
constraint (1), which ensures the balance of factor input and output of the system:
X ship X X ship
yin
t;m;f þ yt;m0 ;f ;m þ kt;m;a vm;a;f ¼ yt;m;f ;m0 þ yout
t;m;f
0
m 6¼m a 0
m 6¼m ð1Þ
8 t 2 T; m 2 M; f 2 F
The activity-analytical approach is illustrated in Fig. 3, considering only

disassembly and mechanical conditioning modules in the ‘‘small’’ versions. One
of each module type is installed in the year 2015. The disassembly module is able to
collect and treat batteries of two different types. Since no other modules are
installed, it collects all available batteries (100 ‘‘Battery Type 1’’, 200 ‘‘Battery
Type 2’’). Two activities can be executed in disassembly: Activity 1 transforms a
unit of the product Battery Type 1 into 100 units of intermediate Cell Type 1 and 5
123
518 C. Hoyer et al.
Fig. 3 Modelling of transformation by means of activity analysis
units of residue Plastics using 0.5 units of Electrical Energy. Activity 2 transforms
one Battery Type 2 into 50 units of intermediate Cells Type 2 and 2 units of residue
Plastics using 0.3 units of Electrical Energy. To treat all collected batteries, activity
1 must be executed with intensity 100 and activity 2 with intensity 200. For that,
110 units of Electrical Energy are required. 900 units of Plastics are generated and
have to be disposed of at the sinks. Further, 10,000 Cells Type 1 and 10,000 Cells
Type 2 are recovered, which are shipped to the subsequent module for further
treatment.
Additional constraints in the optimisation model concern the limited product
availability, the capacity restrictions, the selection of the correct collection cost
level, the minimum operating time of modules, and the number systems of the
decision variables. Further, the legal requirements are expressed by constraints. This
concerns both the mandatory collection of products (which means a rate of 100 % of
returned batteries must be collected) and the minimum recycling rate. With respect
to the latter, a binding calculation method for battery recycling has not been
specified yet. According to a draft of the European Commission, the ‘‘‘recycling
efficiency’ of a recycling process means the ratio obtained by dividing the mass of
output fractions accounting for recycling by the mass of the waste batteries and
accumulators input fraction expressed as a percentage’’ (European Commission
2012). Thus, the recycling rate achieved in each period is calculated as the sum of
materials that are output of the recycling process and that can be rated either as
being recovered or fed to existing recycling systems, divided by the total mass of the
collected batteries. This calculation is done in a constraint, limiting the action space
in the model and assuring that the required capacities and technologies are available
in the network. To analyse the impact of the minimum recycling rate, either the rate
can be changed or the constraint can be deactivated.
123
Uncertainties are accounted for by defining different scenarios and conducting

subsequent sensitivity analyses. Each scenario describes for a specific set of
particularly uncertain parameters the evolution of these parameters. More
precisely, these are the volume of spent batteries available, the prevailing battery
technology, the investments and operating expenses for recycling facilities, and
future material and energy prices. Additionally, the sensitivity of the model
outcomes (e.g. the net present value) with regard to the variation of certain
parameters can be examined. This ex-post scenario analysis is in contrast to robust
approaches where different scenarios are regarded simultaneously in the optimi-
sation. The aim of robust supply-chain network design is to find a solution that
leads to comparably good results for a subset of or even for all plausible scenarios.
A comprehensive discussion and review on robust supply-chain network design
can be found in (Klibi et al. 2010), an exemplary application in (Walther et al.
2012). Robust designs can be achieved by corresponding objective functions, e.g.
minimising the maximum loss or maximising the expected profit over all scenarios
using occurrence probabilities. For that, available models are extended by design
and control variables: the former are the same across all scenarios (in this case,
e.g. initial investment variables), while the latter allow adjustments to scenario-
specific developments (e.g. later investments and recycling programme variables).
Though our approach could be easily extended in that way, our objective is to
analyse the impact of different developments on optimal decisions. A one-fits-all
solution would not allow for such an analysis.
To summarise, the model for technology and capacity planning developed above
integrates decisions on the number of recycling plants of specific technology and
capacity that should be installed over a long-term planning horizon (investment
plan) and on the volume and mix of batteries to be treated (recycling programme
plan). It is profit-oriented and considers both mandatory collection and minimum
recycling rates, dynamic developments, different product types, decentralisation
effects, economies-of-scale effects, material flows, and transformation processes.
3.2 Implementation and complexity of the model
The mathematical optimisation model derived from the illustrated concept is

implemented in AIMMS 3.12 x64. For realistic planning problems as evaluated in
the following, the resulting mixed-integer linear programme embraces about 22,000
variables and 21,800 constraints (for every scenario considered). These problem
instances can be solved with CPLEX 12.4 on a PC that is barely standard today
(Intel Core 2 Duo P8700, 64-Bit Windows 7, 2.54 GHz, 4 GB RAM) in\5 s, using
6 MB RAM.
The problem’s complexity is essentially determined by the number of integer
variables, which is defined by jT j jI j þ jT j jT jþ1
2 jMj and amounts to 1,296 for the
given example. Hence, especially the granularity and length of the planning horizon
T, but also the number of collection cost levels I and modules M considered
influence the complexity.
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520 C. Hoyer et al.
4 Application of the model for the planning of the recycling of lithium-ion

batteries from electric vehicles in Germany
The application of the model is intended to support potential investors in deciding

about which recycling technologies to deploy when and in what capacity for the
recycling of lithium-ion traction batteries in Germany. These decisions depend on
the volume of spent batteries, the prevalent lithium-ion technology, future
commodity prices, the initial investment and fixed expenses of the recycling
technologies, and moreover, the minimum recycling rate. To answer the questions,
the LithoRec process is considered. The planning of the investments in and the
installations of recycling plants is done for the time from 2015 up to and including
2030. For that, the planning horizon is divided into years, resulting in 16 planning
periods. A conglomerate of automobile manufacturers, network operators, logistics
service providers, recycling companies, and specialty chemical companies is
assumed as the potential investor, jointly carrying out the collection and recycling of
all spent batteries arising in Germany.
4.1 Data basis for the planning of recycling technologies and capacities
in Germany
For the parameterisation of the model, data is used that either results from the co-
operation with partners from industry and science within the project LithoRec, or
bases on presumptions made in this context. ‘‘Common data’’ holds true for all
analyses. Beyond that, five scenarios are developed to analyse the impact of
uncertain developments.
4.1.1 Common data
Amongst the common data rank the target interest rate, which is 8 %, and all
indices, i. e. the factors considered (products, intermediates, recyclables, residues,
supplies), the periods of the planning horizon, the available modules as well as their
activities, and the collection cost levels. The following parameters are also identical
in all analyses: the mass of all factors; the capacity, physical life, minimum
operating time, and acceptance parameters of all modules; the module-specific
capacity coefficients and variable operating expenses of all activities; the activity
vectors, which are specific to products or intermediates and modules; and both the
collection cost and the delivery cost parameters.
With regard to the products, six battery variants are distinguished that result from
three different vehicle types—‘‘hybrid electric vehicle’’ (HEV), ‘‘plug-in
hybrid electric vehicle’’ (PHEV), and ‘‘battery electric vehicle’’ (BEV)—and two
battery technologies, NMC and LFP. Other cobalt-based technologies are subsumed
under NMC, as no substantial differences exist concerning the LithoRec process.
For the purpose of normalisation the term ‘‘BEV equivalents’’ (BEV-eq.) is
introduced, meaning the approximate capacity utilisation of a battery variant
relative to a BEV system (BEV system: 1.0 BEV-eq., PHEV system: 0.5 BEV-eq.,
HEV system: 0.1 BEV-eq.).
123
With regard to the modules, each of the three LithoRec technologies

‘‘disassembly’’, ‘‘mechanical conditioning’’, and ‘‘hydrometallurgical conditioning’’
are further distinguished into two capacity classes ‘‘small’’ and ‘‘large’’, resulting in
six modules. Small modules represent the minimum capacities for the corresponding
plants that are technically and economically reasonable. Large modules exhibit a
tenfold capacity. In each case, a module’s capacity relates to the maximum
throughput in a year with 300 days and 24 h of operation, and it is expressed as the
corresponding capacity unit. The capacity unit, the maximum capacity, the
abbreviation used, the physical life, and the minimum operating time of each
module is given in Table 1, as well as the corresponding supplies, recyclables, and
residues.
Considering the six battery variants, the LithoRec process can be depicted by ten
activity vectors. It is assumed that the same activity vectors apply for both the small
and the large capacity class of a module. They are determined by the six battery
variants that are disassembled in disassembly, two cell types that are input of the
mechanical conditioning, and two different cathode coatings treated in hydromet-
allurgical conditioning. The 6 products and 4 intermediates and further 8
recyclables, 4 residues, and 5 supplies lead to 27 factors considered in total. In
Table 2, the activities assigned to the modules and the capacity coefficients and
variable operating expenses associated with them in the year 2015 are specified. For
the latter, an annual, exponential inflation of 2 % is assumed. Table 3 lists the
factors and their masses. Additionally, an exemplary activity vector for the
mechanical conditioning of NMC cells is given.
To estimate the average expenses for battery collection depending on the number
of active disassembly modules and time, an existing facility-location model was
used. The original task of the model was to select locations for collection facilities
in Germany, regarding one representative period, 50 possible locations, and 440
sources. In that model, collection expenses were calculated based on costs per
kilometre and per BEV-eq. using road distances. It was slightly modified by
iteratively fixing the amount of collection facilities to be opened, starting at one and
ending at 50 locations. Subsequently, the average expenses per BEV-eq. for each of
the iterations were calculated. As a result, the collection expense calculated for 2015
starts at 194 EUR/BEV-eq. with one collection location, decreases rapidly to
101 EUR/BEV-eq. for 5 facilities, and converges to 65 EUR/BEV-eq. with 25
locations involved, as shown in Fig. 4. Hence, 25 collection cost levels are
considered (I ¼ f1; 2; 3; . . .; 25g). The delivery expenses for intermediates amount
to 5.2 ct/kg in 2015. For both parameters an annual inflation of 1.3 % is assumed,
which corresponds approximately to the development of the producer-price index
for the road transport of goods (for distances larger than 150 km) in Germany in the
period of 2006–2012 (Statistisches Bundesamt 2013).
4.1.2 Scenario-specific data
The scenario-specific data comprises of data that is classified as particularly

uncertain. This data includes (1) the spent battery volume available, (2) the mix of
battery variants available, (3) the prices for purchase, sale, and disposal of factors,
123
522 C. Hoyer et al.
Table 1 Capacities, abbreviations, operating times, and factors of the modules
Mechanical Hydrometallurgical
Technology Disassembly
Conditioning Conditioning
Capacity unit BEV equivalentsa Metric Tons Metric Tons
Capacity class small large small large small large
Capacity 6,000 60,000 1,500 15,000 3,300 33,000
Abbreviation D1 D2 M1 M2 H1 H2
Physical Life 20 years 20 years 20 years
Minimum Operation 3 years 5 years 5 years 10 years
Recyclables - Copper scrap - Aluminium from cell - Lithium-hydroxide
- Printed circuit boards casing monohydrate
- Stainless steel - Copper filings, briquetted - Sulphate solution
- Aluminium filings, containing transition
briquetted metals
Residues - Plastics - Graphite - Others for disposal
- Others for thermal - Others for thermal
utilisation utilisation
- Others for disposal
Supplies - Electric energy - Sodium hydroxide - Electric energy
- Electric energy - Steam
- HM-1, HM-2b
a
One BEV equivalent corresponds to the approximate, normalised capacity utilisation of a battery
variantcompared to a BEV system
b
Pseudonyms used to preserve business secrets of a project partner
and (4) the specific net present values of the six modules. To analyse the impact of
uncertain developments on the investment plans and the economy of recycling, five
scenarios are developed, each depicting a specific development of all four parameter
groups. In the following, we refer to these scenarios as the Basis scenario and the
scenarios Moderate Prices, High Investments, Low Economic Potential, and 1 M 2020.
A rather moderate volume of spent batteries is presumed in the Basis scenario
(Fig. 5a). Approximately 0.8 million batteries are available in the planning horizon.
For the estimation of the volume of batteries available for recycling, a simulation
model was used as presented in (Hoyer et al. 2011b). The underlying assumptions
are motivated in (Kwade and Bärwaldt 2012). The mix of battery variants is
assumed to be 80 % NMC and 20 % LFP. It is further assumed that the market
prices for factors grow annually by between 2 % (e.g. energy, disposal of hazardous
waste) and 10 % (e.g. copper, printed circuit boards), starting with their today’s
prices. The modules’ specific net present values result from scenario-specific initial
investment expenses, fixed operating expenses, and liquidation revenues. The latter
are defined as a share of the initial investment and are set to the scrap values (see
Table 4). Renewal investments are not considered as the planning horizon under
consideration is shorter than the physical life of the modules. The initial investment
and fixed operating expenses of the modules were estimated in LithoRec.
Depending on the planning stages of each technology, the estimation methods
used class amongst order-of-magnitude estimates and factored estimates, which
usually have an accuracy of ±30 % (Peters et al. 2004, p. 235). For the initial
investment expenses and, by that, the liquidation revenues, an annual, exponential
inflation rate of 2.4 % is assumed, which corresponds to a forward projection of the
price index for chemical plants (Kölbel-Schulze method), given for 2001–2012
(Verband der Chemischen Industrie e.V. 2012, p. 30). Fixed operating expenses
123
Table 2 Activities, capacity coefficients, and variable operating expenses for the year 2015
Module Disassembly Mechanical Hydrometallurgical
conditioning conditioning
Activities a, likewise processible BEV-NMC PHEV-NMC HEV-NMC BEV-LFP PHEV-LFP HEV-LFP NMC LFP NMC LFP
Factors systems systems systems systems systems systems cells cells cathode cathode
coating coating
Capacity coefficients 1.0 0.5 0.1 1.0 0.5 0.1 0.001 0.001 0.001 0.001
Variable operating expense 2015, 63.67 38.20 18.04 63.67 38.20 18.04 0.25 0.25 0.32 0.32
small module [EUR]
Technology and capacity planning for the recycling of lithium-ion
Variable operating expense 2015, 63.67 38.20 18.04 63.67 38.20 18.04 0.03 0.03 0.13 0.13
large module [EUR]
523
123
Table 3 Factors considered, their masses, and an exemplary activity vector
524
Factor class Factors f Unit Mass [kg/Unit] Activity vectors vm;a;f 8 m 2

fM1; M2g; a ¼ ’NMC cells’
123
Products FP BEV-NMC systems pcs. 330.00 –
BEV-LFP systems pcs. 330.00 –
PHEV-NMC systems pcs. 162.50 –
PHEV-LFP systems pcs. 162.50 –
HEV-NMC systems pcs. 33.00 –
HEV-LFP systems pcs. 33.00 –
Intermediates FM NMC cells kg 1 -1.00
LFP cells kg 1 –
NMC cathode coating kg 1 0.32
LFP cathode coating kg 1 –
Recyclables FR Copper scrap kg 1 –
Printed circuit boards kg 1 –
Stainless steel kg 1 –
Aluminium cell casing kg 1 0.03
Copper filings, briquetted kg 1 0.10
Aluminium filings, briquetted kg 1 0.06
Lithium-hydroxide monohydrate kg 1 –
Sulphate solution w/transition metals kg 1 –
Residues FD Plastics kg 1 –
Graphite kg 1 0.24
Others for thermal utilisation kg 1 0.23
Others for disposal kg 1 0.06
Supplies FS Sodium hydroxide kg 1 -0.05
Electric energy kWh – -0.41
Steam kWh – –
HM-1 kg 1 –
HM-2 kg 1 –
C. Hoyer et al.
200
180
Collection Expense
160
[EUR/BEV-eq.]
140
120
100
80
60
40
20
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Number of Collecting Modules
Fig. 4 Average battery collection expenses depending on the number of collecting modules for the year
2015
a
600,000
Volume [Pieces]
Spent-Battery
2020: 7,900
2015: 400
2025: 49,500
500,000
400,000
BEV
300,000
PHEV
200,000
100,000 HEV
0
2015 2020 2025 2030
Time [Years]
b
600,000
Volume [Pieces]
2020: 36,000
2025: 181,000
2015: 1,400
Spent-Battery
500,000
400,000
BEV
300,000
PHEV
200,000
100,000 HEV
0
2015 2020 2025 2030
Time [Years]
Fig. 5 Development of the volume of spent batteries (in pieces, distinguished by vehicle types) in
scenarios a Basis, Moderate Prices, High Investments, and Low Economic Potential and b 1 Mio 2020
include repair, maintenance, insurances, administration, and management. These

expenses have been estimated based on empirical factors and the initial investments.
They are expected to increase annually by 2 %.
In the Moderate Prices scenario, lower prices of important metals are expected.
The price increase of copper and printed circuit boards is 4 % instead of 10 %,
aluminium prices increase by 2 % instead of 5 %. The initial level of prices is
reduced for some materials (copper filings -20 %, lithium-hydroxide -25 %). In
High Investments, the initial investment and fixed operating expenses are expected
123
526 C. Hoyer et al.
Table 4 Initial investment expenses, fixed operating expenses, and liquidation revenues used for the
calculation of specific net present values
Technology Capacity Initial investment expense Fixed operating expense Liquidation
class (Basis: 2012) [EUR] (Basis: 2012) [EUR/a] revenue
[% of initial
Basis Higher Basis Higher investment]
estimate investment estimate investment
Disassembly small 560,000 672,000 227,000 272,400 20

large 3,100,000 3,720,000 1,020,000 1,224,000 20
Mechanical small 2,100,000 2,730,000 120,000 156,000 5
conditioning large 5,240,000 6,812,000 255,000 331,500 5
Hydrometallurgical small 10,000,000 10,000,000 1,350,000 1,350,000 10
conditioning large 40,000,000 44,000,000 5,380,000 5,918,000 10
Table 5 Scenarios
Scenarios Basis Moderate High Low 1 M 2020

Prices Investments Economic
Parameter Group Potential
Spent battery volume
Moderate Moderate Moderate Moderate High
Spent battery mix

Increasing
NMC prevails NMC prevails NMC prevails NMC prevails
LFP share
Factor prices
Increasing
Increasing Increasing Stagnating Increasing
moderately
Initial investment and
Higher than
fixed operating As estimated As estimated As estimated As estimated
estimated
expenses
Grey-shaded boxes indicate parameter groups with deviating values compared to the Basis scenario
to turn out higher than estimated in Basis. For each module, the degree of deviation
depends on the accuracy of the estimate methods used: ?20 % for both disassembly
modules, ?30 % for both mechanical conditioning modules, and ?10 % for the
large hydrometallurgical conditioning module (see Table 4). For the small version,
empirical values were available. The Low Economic Potential scenario differs from
Basis inasmuch as the prevailing battery technology and the development of factor
prices lead to conditions for the recycling that seem rather economically
unattractive. Increasingly, NMC is substituted by the less valuable LFP. It is
assumed that the share of LFP follows a logistic function, still starting from 20 % in
2015 but growing rapidly and ending at 80 % in 2030 (maturity stage). In addition
to this, all factor prices stagnate at today’s level. In the scenario 1 M 2020, a
particularly high volume of spent batteries is assumed, arising from a very rapid
market penetration that corresponds most closely to the intentions of Germany’s
National Electromobility Development Plan (one million electric vehicles in 2020).
Overall, 2.7 million batteries are available in the planning horizon in this scenario
(Fig. 5b).
123
The essential differences between the five scenarios are listed in Table 5.
4.2 Application of the model and evaluation of the results
4.2.1 Impact of uncertain developments
The first analysis focusses on the generation of investment plans and the impacts of
uncertain developments. That is to answer the question, which recycling technol-
ogies should be established in what capacity at what point in time depending on the
volume of spent batteries, the prevalent lithium-ion technology, future commodity
prices, and the initial investment and fixed expenses of the recycling technologies.
Figure 6 illustrates the optimal investment plans for four scenarios, excluding the
Moderate Prices scenario due to its similarities with the Basis plan. All plans have
in common that all three technologies are operated from the beginning of the
planning horizon. Furthermore, a small disassembly plant and a small hydromet-
allurgical conditioning plant as well as a mechanical conditioning plant are installed
initially. These results indicate that a central recycling system should be preferred
up to and including 2020 in all scenarios with a moderate volume of spent batteries.
In the high-volume scenario, collection and disassembly should be decentralised
from 2017 on, and mechanical conditioning should be operated in two separate
plants from 2023 on.
The investment plans of the scenarios Basis, Moderate Prices, and Low
Economic Potential are quite similar. Right from the start, the mechanical
conditioning of cells is done in a large plant. To decrease collection expenses,
additional small disassembly plants are installed almost annually and in increasing
numbers from 2021 on. In 2029, a large disassembly plant is added. Thus, 16 small
and 1 large disassembly plants are operated in 2030. The three scenarios differ with
respect to the last planning periods between 2027 and 2030. Amongst others, one
further small mechanical conditioning plant and one further small hydrometallur-
gical conditioning plant are added in the case of Low Economic Potential. This is
because, from 2025 on, the mandatory rate of 50 % cannot be achieved anymore
due to the increasing share of LFP batteries. Thus, the minimum recycling-rate
constraint had to be adjusted to retain the solvability of the problem. Instead of
50 %, the maximum rate achievable was pre-set for the subsequent years (48.9 % in
2025, decreasing to 44.4 % in 2030). To achieve these rates, no intermediates may
be disposed of, but instead the additional capacities have to be installed. In contrast,
the two plants installed in Basis in 2028 (small mechanical conditioning) and 2029
(small hydrometallurgical conditioning) are missing in Moderate Prices. In all three
cases, none of the plants installed are liquidated ahead of time.
In High Investments, two essential differences can be noticed with respect to
Basis. Firstly, a large disassembly facility is installed already in 2027 instead of
2029. Consequently, the installation of seven small plants is omitted; two small
plants installed earlier are liquidated in 2030 and are replaced by an additional large
plant. Thus, seven small and two large disassembly plants are operated in 2030. The
collection is less decentralised because the higher investments and fixed operating
expenses now outweigh the potential savings in collection by decentralisation.
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528 C. Hoyer et al.
Scenario Basis High Investments
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Disassembly
(small)
Disassembly
(large)
Mechanical conditioning
(small)
(large)
Hydrometallurgical
conditioning (small)
Hydrometallurgical
conditioning (large)
Low Economic Potential 1 M 2020
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Disassembly
(small)
Disassembly
(large)
(small)
(large)
Hydrometallurgical
conditioning (small)
Hydrometallurgical
conditioning (large)
Fig. 6 Investment plans for four out of five scenarios
Secondly, a small plant for mechanical conditioning is installed in 2015 instead of a

large one. Again, this is due to the considerably higher investments and fixed
operating expenses, having an even higher impact because of the lower discount rate
in the early periods. Large plants follow in 2021 and 2028.
In 1 M 2020, capacities are established much faster. Already in 2025, 16 small
and 1 large disassembly plants are deployed. Small mechanical conditioning plants
are used at no time, and the small hydrometallurgical conditioning plant installed
123
initially is complemented first by a large one in 2024 and liquidated at the end of
that year, having reached the minimum operating time.
Big differences between the scenarios can be noticed with respect to the resulting
net present value (NPV), the internal rate of return (IRR), and the amortisation periods
of the investment plans (see Table 6). The investments are highly economic if NMC
batteries prevail and prices increase (NPV: 159.4 M EUR in Basis, 152.1 M EUR in
Higher Investments, 25.9 M EUR in Moderate Prices), whereas the success of LFP
batteries and stagnating prices lead to economic loss (-47.8 M EUR in Low
Economic Potential). By contrast, with the higher volume of spent batteries, a fourfold
NPV (610.1 M EUR) can be generated in 1 Mio. 2020. These statements are further
strengthened by the internal rates of return, which deviate notably from the underlying
target rate, and the differences in the payoff period.
The composition of the cash flows that underlie the NPVs can be extracted from
Fig. 7. It becomes obvious that deviating cash flows for factors are the main cause
for the differences of the NPVs. They sum up to 751.3 M EUR in both Basis and
Higher Investments, to 365.8 M EUR in Moderate Prices, but merely to
208.2 M EUR in Low Economic Potential. Further revenues of between 7.6 and
11.0 M EUR are caused by plant liquidations. The positive cash flows stand against
negative cash flows of between 255.3 and 303.3 M EUR for collection, initial
investments, operation, and delivery between modules in all scenarios with a
moderate volume of batteries. In 1 M 2020, a total 2.3 billion EUR of revenues are
contrasted by expenses of 661.6 M EUR.
Against the background of the high uncertainties, sensitivity analyses were
conducted. The investment plans were robust concerning deviating developments of
individual factor prices, of the target rate, and of the variable operating expenses.
Even higher liquidation values only lead to minor changes. Additionally, the quality
of the Basis investment plan was analysed. For that, the Basis investment plan
decisions were fixed and the model was parameterised subsequently with other
scenarios. As Table 7 shows, in both Moderate Prices and High Investments, the
NPVs and IRRs decrease, whereas they increase in in Low Economic Potential. The
total recycling rate increases in Moderate Prices, remains constant in High
Investments, and decreases in Low Economic Potential. The changes originate in the
fact that, with the Basis plan, more (less) capacity is generated than with the original
plans, so more (less) cells and cathode coating can be treated. Hence, as financial
figures and recycling rates change only slightly, the Basis investment plan seems
Table 6 Net present values, internal rates of return, and payoff periods of the investment plans
Scenario Basis Moderate High Low 1 M 2020
Prices Investments Economic
Potential
Net present value 159.4 25.9 152.1 -47.8 610.1

[M EUR]
Internal rate of 27.7 14.2 27.5 -62.6 46.3
return [%]
Payoff period [year] 2025 2029 2026 – 2021
123
530 C. Hoyer et al.
Fig. 7 Aggregate cash flows by origin
Table 7 Performance of the Basis investment plan when other scenarios eventuate
Scenario Moderate High Low Economic
Prices Investments Potential
Net present value [M EUR] 25.1 152.0 -41.4

(Difference [M EUR]) (-0.8) (-0.1) (?6.4)
Internal rate of return [%] 14.0 26.2 -45.8
(Difference [%-points]) (-0.2) (-1.3) (?16.8)
Total recycling rate [%] 58.48 58.48 46.36
(Difference [%-points]) (?1.80) (–) (-0.26)
very suitable in scenarios with a moderate volume of spent batteries. With a higher
volume as in 1 M 2020, however, capacities have to be expanded much faster to be
able to treat the high volumes and achieve the mandatory recycling rate. Thus, the
Basis plan cannot be applied.
Summarised, the analyses underline that the quality of a plan is particularly
dependent on the available volume and the mix of spent batteries as well as the
factor prices. Thereby, the volume of battery returns has a high influence on both the
utilisation of decentralisation effects to reduce collection costs in the disassembly
stage and the utilisation of economies of scale in hydrometallurgical conditioning by
replacing small plants by large ones. Although the development of prices and the
123
technology mix of the batteries is particularly uncertain, the results show a high
margin between the net revenues from factors (revenues from selling recyclables
minus expenses for supplies and disposal) and the expenses (collection of batteries,
transport of cells and cathode coating, and installation and operation of recycling
plants) in four out of the five scenarios. Linked with IRRs that are far better than the
target interest rate, this gives enough scope for profitability even with a lower
increase in price and higher LFP shares. Only in the very pessimistic assumption of
LFP prevailing and prices stagnating, the expenses outweigh the revenues.
Additionally, for a moderate volume, it has been shown that the Basis plan is
suitable even if factor prices are lower, investments are higher, or if the share of
rather unattractive LFP batteries is exceptionally high.
4.2.2 Impact of the mandatory minimum recycling rate
The second analysis serves the purpose to estimate the impact of the minimum
recycling rate on the recycling of lithium-ion batteries. To quantify the impact, the
minimum recycling-rate constraint of the model is overruled. Then, for each
scenario, the resulting problem is solved again, and the results are compared to the
results from the previous study with regard to the optimal investment decisions, the
resulting NPV, the recyclables recovered, and the residues disposed.
The bar diagram in Fig. 8 reveals the optimal points in time for first-time
investments for each module. Each bar depicts the earliest (left end of the bar) and
latest year (right end of the bar) of the first installation of a plant of a specific
technology and capacity across all scenarios. A bar’s width visualises the scenarios’
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
small 2030
Disassembly
large
Without
minimum small
Mech. cond.
recycling large
rate
small
Hydrom. cond.
large
small
Disassembly
large
With
minimum small
Mech. cond.
recycling large
rate
small
Hydrom. cond.
large
The shading illustrates the number of scenarios in which a module is operated in a particular year:
in one scenario
in two scenarios
in three scenarios
in four scenarios
in all scenarios
Fig. 8 First-time investment compared for all modules with and without minimum recycling rate
123
532 C. Hoyer et al.
extent of deviation in that matter. Its shading illustrates the number of scenarios in
which a module is operated in a particular year.
By comparing these bars with and without a pre-set minimum recycling rate, it
can be seen that decisions with respect to the disassembly stage are identical in both
cases. This is because the volume of batteries that has to be treated in disassembly is
not influenced by the minimum recycling rate, but only by the mandatory collection
rate (the treatment of each single battery is mandatory). On the contrary, decisions
made with respect to the mechanical conditioning stage are different. With the
minimum recycling rate, mechanical conditioning is conducted right from the
beginning of the planning horizon in 2015. Without the minimum recycling rate, the
installation is postponed by between 2 and 5 years. The investment in the small
plant for hydrometallurgical conditioning is postponed by 2–8 years.
Furthermore, the minimum recycling rate affects NPVs, the masses of materials
recovered, and the recycling rates achieved in total. NPVs are decreased (by between
-2.4 and -26.7 M EUR) mainly through plants that are installed earlier and
operated longer than economically optimal. Particularly interesting is the NPV
contribution of the different technologies (Fig. 9). Obviously, big differences exist,
but also the impact is inversed in case of disassembly. This is caused by omitted
disposal expenses that otherwise occur when cells have to be disposed of due to
missing mechanical conditioning plants or insufficient capacities. The impact on the
NPVs is particularly high for hydrometallurgy in the scenario Low Economic
Potential. The minimum recycling rate requires to recycle all LFP cells and cathode
coating that otherwise would have been disposed of. For sufficient capacity,
additional hydrometallurgical plants are installed from 2027 on, which compromises
the profitability of this technology. Yet, this effect also shows up as a particularly
higher mass of recycled materials (6,500 tons or ?8.1 %) and lower mass of residues
(-3,700 tons or -9.7 %). The recycling rate increases from 43.1 to 46.6 %.
The analysis reveals that the minimum recycling rate partly causes a considerable
decrease of the profitability of recycling. To respect the mandatory rate, the
LithoRec process has to be established right from the beginning of the planning
horizon. This reduces the freedom of action for the investor considerably. The
Difference of Net Present Value
with Minimum Rate [M EUR]
5.0 0.3 0.3 0.3 0.7 0.2

0.0
-5.0 -1.3 -1.9 -1.9 -2.0 -0.8
-1.8
-10.0 -8.0 -8.0
-8.8
-15.0
-20.0
-25.0
-30.0 -25.3
Difference Difference Difference Difference Difference
Basis Moderate Prices High Investments Low Economic 1 M 2020
Potential
Disassembly Mechanical conditioning Hydrometallurgical conditioning
Fig. 9 Difference of the net present value contributed by the technologies with minimum recycling rate
compared to the unconstrained case
123
earlier installation of plants increases the investor’s risk, as he has to invest at a

point in time when future developments are particularly uncertain and dynamic. Yet,
the minimum recycling rate secures the recovery of a large mass of recyclables and
the avoidance of hazardous waste if LFP batteries prevail.
4.2.3 The perspective on individual actors
As has been discussed, in reality, a recycling network typically consists of

individual actors. Although the approach chosen optimises the profitability of the
recycling network as a whole, it allows for a transfer of the results to individual
actors, which is because of the explicit modelling of cash flows and the recycling
process with its multiple stages. For the transfer, each technology is associated with
a different group of actors: disassemblers, mechanical conditioners, and hydromet-
allurgical conditioners. Further, the battery and automotive industry is considered,
as it is legally and financially responsible for the recycling. Collectors are not
discussed, as these have to be paid by manufacturers anyway. Every group of actors
may comprise of either a single actor or multiple actors. By looking at the NPVs as
well as the underlying volume and timing of cash flows of each group of actors,
conclusions can be drawn about the organisation of the network, particularly about
the need for an allocation of the cash flows amongst the partners and for battery and
automotive manufacturers for funding the network.
Figure 10 illustrates the NPVs that are generated in the scenarios, itemised for
each actor. The NPV of mechanical conditioners considerably exceeds the
aggregate NPVs of all other actors in four scenarios. Thus, profit in the network
is particularly contributed by mechanical conditioners, followed by hydrometallur-
gical conditioners, who yet yield a negative NPV if the share of LFP batteries is
high. Disassemblers only contribute positively if the share of NMC batteries and the
prices for the factors are high.
Actor's Net Present Value [M EUR]
400
350
300
250
200
150
100
50
0
-50
Mech. cond.
Mech. cond.
Mech. cond.
Mech. cond.
Mech. cond.
Hydrom. cond.
Hydrom. cond.
Hydrom. cond.
Hydrom. cond.
Hydrom. cond.
Disassemblers
Disassemblers
Disassemblers
Disassemblers
Disassemblers
Basis Moderate Prices High Investments Low Economic 1 M 2020

Potential
Fig. 10 Net present values contributed by the actors
123
534 C. Hoyer et al.
180
160
140
Hydrometallurgical conditioners
Cash Flow [M EUR]
120
Mechanical conditioners
100 Disassemblers
80
60
40
20
0
-20
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Fig. 11 Cash flows for disassemblers, mechanical conditioners, and hydrometallurgical conditioners
(liquidations in 2031 are not shown)
Table 8 Actors’ net present values, payoff periods, and internal rates of return in Basis
Net present Payoff period Internal rate
value [M EUR] [year] of return [%]
Network w/o collectors 181.6 2025 30

Disassemblers 19.4 2025 35
Mechanical conditioners 104.8 2023 38
Hydrometallurgical conditioners 57.4 2026 23
To analyse the consequences of these different NPVs for the organisation of the
network, we take a deeper look at individual cash flows and risks of the actors by
means of the Basis scenario. The timing and volume of the cash flows in Fig. 11
reveal two important facts. Firstly, the total annual cash flows are highly dynamic.
This indicates that, initially, manufacturers will have to pay the actors for recycling,
whereas there is room for repayments for each battery recycled in later years.
Secondly, the allocation of cash flows to the partners, in time and in volume, is
clearly heterogeneous. Disassemblers start with low investments followed by
negligible returns. Higher cash flows are earned from 2023 on. Initial expenses of
mechanical and hydrometallurgical conditioners are much higher. As early as 2018,
mechanical conditioners earn slightly positive cash flows that, subsequently, grow
strongly. By contrast, hydrometallurgical conditioners have considerable additional
expenses before they earn first positive cash flows in 2021. These differences in
volume and timing of the cash flows do not only lead to different profitability, but
also to different risks for each actor in terms of the individual payoff period and the
internal rate of return (Table 8). Obviously, mechanical conditioners profit by far the
most amongst the three actors. While having the lowest risk due to comparably fast
amortisation, they are also paid the highest risk premium. In comparison, the
hydrometallurgical conditioners have the highest risk and a much lower risk
premium. Disassemblers are in between, but profit less due to the much lower NPV.
This heterogeneity of profits, risks, and risk premiums for each actor reveals a clear
123
necessity for co-operation models (e.g. joint ventures) and/or allocation mechanisms
(e.g. compensation prices, two-part tariffs, etc.) to realise the Basis plan. Beyond
that, the comparatively late payoff periods may be prohibitive, since private investors
often target amortisation in \5 years instead of 8–11 years as in the given case.
The conducted analyses allow for a recommendation to the battery and automotive
manufacturers. The manufacturers should aspire to realise a joint network in a co-
operation, involving recycling companies, to share costs and risks of collection and
recycling. It has been shown that the minimum recycling rate requires an installation
of the LithoRec process earlier than economically optimal, resulting in lower net
present values, increased risk, and thus lower attractiveness for investors. To induce
an early establishment and to achieve the mandatory rates, manufacturers must create
corresponding incentives for the actors. This includes by way of example financial
participation (venture capital) or long-term contracts assuring the supply with spent
batteries. However, the economic efficiency of the LithoRec process considerably
depends upon the question whether the spent batteries will actually be at the
recycling network’s disposal. A displacement of the batteries into processes where
technology-specific materials (e.g. lithium, electrolyte, and conducting salts) are
irretrievably lost is opposed to that and counteracts both the secure supply of the local
industry with these materials and the satisfaction of the mandatory recycling rate. To
prevent this, battery and vehicle manufacturers must gain access to the batteries after
their use phase. As neither customers nor car distributors nor car recyclers are
obligated to return batteries to the manufacturer by law, a deposit system could be
required. The value of the deposit should be at least as high as the expected value of
the contained metals copper, lithium, cobalt, and nickel less the costs of disassembly
to prevent displacement into inefficient processes. Additionally, the legislator could
complement the existing regulations with lithium-ion specific treatment require-
ments, e.g. material-specific minimum recycling rates. To increase attractiveness for
investors, he could further allow the temporary storage of cells if recyclers commit
themselves to a high-value recovery in later years.
5 Discussion and conclusion
In this paper, optimal investment plans for the installation of plants in a recycling
network for lithium-ion batteries from electric vehicles are determined, and
recommendations for potential investors are derived. To this end, corresponding
recycling processes are characterised, strategic planning tasks are worked out, and a
mathematical optimisation model for the planning of technologies and capacities to
be deployed in the network is presented. The model is applied in an extensive study
to analyse the impact of uncertain developments as well as mandatory minimum
recycling rates on the profitability of the recycling of lithium-ion traction batteries.
The results are transferred to the level of individual actors to discuss consequences
for the organisation of the network.
The model enables a potential investor to plan investments into recycling plants
of different technologies and capacities in such a way that the net present value of
the cash flows resulting in the network is maximised given the investor’s
123
536 C. Hoyer et al.
expectations on future developments of the volume and mix of spent batteries, the
prices of recyclables, the investment and fixed operating expenses of the plants, and
other factors. Modelling the production-related processes and the transformation of
materials connected with them by means of linear activity-analysis allows the
consideration of multi-level co-production processes with alternative technologies
as well as different product variants, intermediates, supplies, recyclables, and
residues. Economies of scale are depicted by capacity classes, decentralisation
effects in the collection of batteries are accounted for by a pre-set, piecewise-
linearised cost function. The problem instances resulting in the application of the
mixed-integer optimisation model can be solved optimally within a few seconds by
standard mixed-integer solvers running on standard computers.
The results emphasise what important insights are facilitated by the explicit
consideration of dynamic developments in our model. In combination with the
activity-analytical modelling of material flows, impacts of changes in the price and
quantity structure on investment decisions and profitability of different technologies
can be analysed, and conclusions can be drawn for individual actors. Activity-
analytical modelling also helps to integrate the calculation of the recycling rates in
the model. This enables deciding specifically when to recycle which types of
products and intermediates in which quantity in a way that the profit is maximised
while the minimum recycling rate is respected. It facilitates us to show exactly the
different impacts the minimum recycling rate has on the profitability of the
technologies, on the masses of recovered materials, and on the total recycling rates
achieved, considering particularly the development of the mix of batteries. Further,
the economic assessment with the key figures NPV, IRR, and payoff period meets
the requirements of high dynamics and is highly relevant in practice and theory.
Though developed explicitly for the case of lithium-ion battery recycling, our
approach may be applied in other cases of reverse supply-chain planning, too.
Thereby, it is not limited to the optimisation of networks, but it is suitable even for
individual companies considering investments into own recycling processes. As
compared to existing facility-location models in the field of reverse logistics like
those discussed in Sect. 2.3, its advantages become obvious whenever
1. the envisaged recycling process consists of multiple stages and different

variants of recycling technologies in different capacities are available for each
stage, with some technologies being optional,
2. volumes of product returns, the mix of these returns, the composition of the
products, and/or prices for intermediates, recyclables, residues, and supplies are
highly dynamic, and
3. the planning of locations of plants in detail are unimportant compared to the
choice of technologies and capacities.
Although not a necessity, the full potential of the model is exploited if minimum
recycling quotas should be considered.
These advantages over existing models shall be described on basis of a specific
example, for which we use the representative model of (Dat et al. 2012). The model
123
integrates multiple products (end-of-life electrical and electronic devices) and

different multi-stage treatment processes, and it decides on the erection of
corresponding facilities. The complete sequence of treatment steps is pre-set for
each product. As a result, all facilities required for the treatment must be installed.
Thus, the structure of the transformation process is pre-defined. The first advantage
of our approach is that it would let it be a question of optimisation whether the
products or their components should be disassembled, recycled, repaired, or
disposed of. It would weigh up costs of treatment in the required facilities and
revenues from recovered materials with the alternative options and would choose
the economically efficient option. The second advantage is that our approach would
allow for a sequential deployment of the recycling network. This seems appropriate
since amounts of sold electrical devices are still increasing and returns are dynamic.
The third advantage resides in the applicability of our model for real problem sizes.
The model of (Dat et al. 2012) is applied in a numerical example with 7 sources and
sinks, 7 potential facilities, 3 products, and 16 components. However, real world
problems for designing a recycling network on national level would embrace
thousands of sources and hundreds of potential locations. Most certainly, the
extended facility location problem could not be solved to optimum in such a setting,
while our model would still allow for solving the problem in an acceptable time
because of its much smaller size.
Both the approach selected and its application exhibit limitations. Firstly, questions
of competition are not regarded. This is motivated by the focus on the maximisation of
the profitability of the recycling network as a whole as we assume that battery and
automotive manufacturers as well as plant operators co-operate to achieve the
mandatory recycling rates and to save costs. However, the allocation of cash flows in
the network is of particular relevance for the different actors; thus, it demands for
further research. In-depth research could be conducted on mechanisms for an efficient
re-allocation of profit and risk in the network to individual actors. Secondly, different
options a potential investor has are not considered in the model. These are especially
the additional purchase of batteries from abroad to utilise the capacities installed and
the temporary shutdown of individual plants to reduce fixed operating expenses.
Nevertheless, since these real options are most often accompanied by a positive
influence on the cash flows, this limitation fulfils the imperative of a conservative
estimation of the profitability. Thirdly, chemical processes in particular feature
nonlinear relationships for different operating points. Yet, the linear model
formulation is sufficiently precise considering the high aggregation level of planning.
One further limitation of both model and study is that we do not account for all
possible developments of uncertain parameters with the five scenarios. In fact, the
number of possible developments in reality is countless, especially concerning the
development of the volume of spent batteries. Nevertheless, the scenarios depict a
wide spectrum of these developments and are thus sufficient for a first assessment of
the profitability of the recycling. Further scenarios may be regarded when the
electric vehicle market advances. This applies analogously for the six battery
variants considered, whose compositions have been found representative within the
LithoRec project. In future research, the model could be extended in terms of a more
elaborate consideration of uncertainties. Robust planning techniques or a distinction
123
538 C. Hoyer et al.
of parameters regarding their degree of uncertainty (e.g. risk vs. fuzziness) could be
first directions for advancements.
Acknowledgments We would like to acknowledge the support of the German Federal Ministry for the
Environment, Nature Conservation and Nuclear Safety, funding the research projects LithoRec
(16EM0023) and LithoRec II (16EM1024). We further greatly appreciate our industrial and scientific
project partners for their valuable co-operation and assistance.
Appendix: Mathematical formulation of the optimisation model for technology

and capacity planning
The model will be explained in two steps: Firstly, all symbols used are defined in
Tables 9, 10 and 11. Decision variables are emphasised for convenience. Secondly, the
objective function and the constraints of the model are formulated and explained.
Table 9 Sets and indices of the model

Sets Indices Description
F f Inputs and outputs (materials and energy), including

FP F Products
FM F Intermediates
FR F Recyclables
FD F Residues
FS F Supplies
T N t; tB ; tE Planning periods, with T ¼ ft; t þ 1; t þ 2; ::;
t 2;
t 1;
tg
M m; mS ; mD Modules, including
Mc M Collecting modules (first process step only)
A a Activities
I N i Collection cost levels
Table 10 Decision variables of the model

Variable Number Description
System
xm;tB ;tE 2 N0 Investment programme variable: Number of modules m operated from

beginning of period tB to end of period tE (with tB tE )
kt;m;a 2 Rþ Intensity variable: Intensity of operation of activity a in all modules m active in
period t
yin
t;m;f
2 Rþ System input variable: Total amount of factors f that are purchased system-
externally and are input of modules m in period t
yout
t;m;f 2 Rþ System output variable: Total amount of factors f that are sold or disposed
system-externally and are output of modules m in period t
yship 2 Rþ Throughput variable: Total amount of intermediates f 2 FM that are delivered
t;mS ;f ;mD
from modules mS to modules mD in period t
zt;i 2 f0; 1g Collection cost level variable: True (1), if collection cost level i is selected in
period t, else false (0)
123
Table 11 Parameters of the model

Parameter Class Parameter Description
Factors at;f ; f 2 FP Number of products f available in period t

mf Mass of one unit of factor f (to determine recycling rates)
pin
t;f Purchase price. Price for the acquisition of one unit of factor
f in period t. Negative value if expense; positive value if
revenue
pout
t;f Sale/disposal price. Price for sale or disposal of one unit of
factor f in period t. Negative value if expense; positive
value if revenue
pcoll
f ;i;t , f 2 FP
Collection cost. Average expense for collecting one product
f in collection cost level i and period t
pship
f ;t , f 2 FM
Delivery cost. Average expense for delivering an
intermediate f from one module to another in period t
Technical properties tmmax Physical life of module m after initial installation or renewal
of the modules in periods
tmmin Pre-set minimum time of operation of module m in periods
cmax
m Module capacity. Technical maximum capacity of module m
per period in module-specific capacity units
cm;a Capacity coefficient. Capacity of module m required for one
execution of activity a in module-specific capacity units
cacc
m;f ; f 2 FP [ FM Acceptance parameter. True (1) if product or intermediate f
can be processed by module m, else false (0)
vm;a;f Activity coefficient for module m, activity a, and factor f .
Negative value if input; positive value if output
Monetary properties pinv
m;tB ;tE Specific net present value. Discounted cash flows including
of the modules the initial expense for installation and start-up, and, if
appropriate, renewal expenses, all fixed expenses for
operation, and liquidation revenues if a module m is
operated from the beginning of period tB to end of period
tE
pop
t;m;a Operating expense for one execution of activity a in module
m in period t; proportional to intensity of production and
unrelated to energy or materials, e.g. wages
Others rt Mandatory recycling rate in period t
qt;f Collection quota that has to be achieved for product f in
period t
h Target interest rate
dt Discount rate in period t, with dt ¼ ð1 þ hÞt
The objective is to maximise the net present value of the cash flows in the
planning horizon. For reasons of clarity and comprehensibility, the objective
function (2) is split: The first summand of the objective function DCFmInvest (3)
represents the aggregate discounted cash flows related directly to the installation and
operation of all units of modules of type m. For that, the corresponding decision
variables xm;tB ;tE are multiplied with module-specific discounted cash flows, which
include initial expenses for installation and start-up, potential renewal expenses,
fixed expenses for operation, and liquidation revenues. The latter factor is expressed
123
540 C. Hoyer et al.
by the net present values pinv m;tB ;tE for all modules and all possible intervals of
operation in the planning horizon, which have to be calculated by means of a
predefined logic. While reducing the complexity of the model, this approach enables
high flexibility such as pre-setting multi-periodic investment profiles, excluding
certain combinations by using prohibitively high (negative) values, or permitting
renewal investments to operate modules longer than their (initial) physical life.
The second summand of the objective function consists of three cash-flow terms,
each being related to a specific period and discounted by multiplication with the
discount rate dt . The three terms depict cash flows caused by tactical decisions with
regard to the recycling programme. The first one, CFtOperating (4), is the aggregate
sum of variable operation expenses over all activities executed in all modules. The
second one, CFtTransport (5), is the aggregate expense for the collection of products
from the sinks and for the delivery of intermediates between modules. The third one,
CFtFactors (6), is the aggregate cash flow for the purchase of products and supplies
and for the sale and disposal of recyclables and residues.
X X
Max NPV ¼ DCFmInvest þ ðCFtOperating þ CFtTransport þ CFtFactors Þ dt ð2Þ
m t
with XX
DCFmInvest ¼ pinv
m;tB ;tE xm;tB ;tE 8 m 2 M; ð3Þ
tB tE tB
XX
CFtOperating ¼ pop
t;m;a kt;m;a 8 t 2 T; ð4Þ
m a
0 1
X X X X X
CFtTransport ¼ @ at;f qt;f zt;i pcoll
f ;i;t þ yship ship A
t;mS ;f ;mD pf ;t
f 2FP i mS mD 2MnfmS g f 2FP [ FM
8 t 2 T;
ð5Þ
X X
CFtFactors ¼ yin
t;m;f p in
t;f þ y out
t;m;f p out
t;f 8 t 2 T: ð6Þ
m f
The solution space of the model is constrained by the following side-conditions.

Beyond these, non-negativity and binary constraints exist that correspond to the
number systems and decision variables described above.
Product collection rate and availability constraint (7): the collection rate given
for every product and period must be achieved exactly. The constraint assures that
the aggregate input of products into the system (left-hand side of the equation) is
equal to the rate of products that has to be collected (right-hand side).
X
yin
t;m;f ¼ at;f qt;f 8 t 2 T; f 2 FP ð7Þ
m
123
Acceptance constraint (8): product or intermediate f may be an input into a

module m only if specified by cacc m;f . BigM is a sufficiently large number, e.g. the
upper limit of the underlying data type (signed doubleword: 231 1).
X
yin
t;m;f þ yship acc
t;mS ;f ;mD cm;f BigM 8 t 2 T; mS 2 M; f 2 ðFP [ FM Þ ð8Þ
mD 2MnfmS g
Material-flow constraint (9): each factor that is input into a module has to be
purchased externally (first term on the left-hand side of the equation) or delivered
from another module (second term) and is consumed (supplies like energy) or is
transformed into another factor analogously to the activities executed in the module
(third term). The corresponding output is either delivered to other modules (first
term on the right-hand side; only intermediates) or sold or disposed of externally
(second term; intermediates, recyclables, and residues).
X X X
yin
t;m;f þ yship
t;mS ;f ;m þ kt;m;a vm;a;f ¼ yship out
t;m;f ;mD þ yt;m;f
mS 2Mnfmg a mD 2Mnfmg ð9Þ
8 t 2 T; m 2 M; f 2 F
No short-circuits constraint (10): a factor may not be input and output at the same
time in a module.
yship
t;m;f ;m ¼ 0 8 t 2 T; m 2 M; f 2 F ð10Þ
Minimum recycling-rate constraint (11): the aggregate mass of factors that are
rated as recyclables (FR ) and are brought to sinks outside the system boundary must
be at least as high as the mass of products collected multiplied by the mandatory
recycling-rate in that period, rt .
XX XX
mf yout
t;m;f rt mf yin
t;m;f 8t2T ð11Þ
f 2FR m f 2FP m
Capacity constraint (12): the capacity required for the execution of activities in a
certain period and module type (left-hand side of the equation) may not exceed the
capacity of the module that is installed at the same time (right-hand side). On the
left-hand side, the intensity of every activity that is executed in the specified module
m and in the specified period t is multiplied with its corresponding capacity
coefficient to obtain the aggregate capacity utilisation. On the right-hand side, the
capacity installed at the specified period is determined by the double sum. For that,
the number of modules that have been activated previously or simultaneously
(tB t) and that have not been deactivated previously (tE t) is multiplied with the
technical capacity of each module.
X XX
cm;a kt;m;a xm;tB ;tE cmax
m 8 t 2 T; m 2 M ð12Þ
a tB t tE t
Minimum operating-time constraint (13): where appropriate, a pre-set minimum

time of operation of a module tmmin has to be satisfied. Firstly, all intervals of
123
542 C. Hoyer et al.
operation are excluded that are shorter than the pre-set number of periods: let tB be
the first period of operation and tE the last—so that Dt ¼ tE tB þ 1 is the operating
time—then the decision variable xm;tB ;tE may be greater than 0 only if
tE tB þ 1 tmmin , or tE tB þ tmmin 1. Formulated as a constraint, all intervals

shorter than that are excluded, so that xm;tB ;tE is 0 for all tE 2 tB :: tB þ tmmin 2 .
Secondly, this rule is disabled for all intervals that end in the last period of the
planning horizon (t) by using a minimum function. This is to avoid the effect that
investments are antedated only to achieve the minimum operating time, which
would eventually occur due to the limited planning horizon.
xm;tB ;tE ¼ 0 8 m 2 M; tB 2 T; tE 2 ftB ::minðtB þ tmmin 2; t 1Þg ð13Þ
Collection cost level selection constraint (14): the collection cost level selected in
a specified period must equal the number of installed collecting modules, which is
determined analogously to (12) at the right-hand side of the equation. On the left-
hand side, the index of the collection cost levels i is multiplied with the binary
collection cost level variable zt;i , which is 1 if and only if the collection level i is
selected.
X XX
i zt;i ¼ xm;tB ;tE 8 t 2 T; i 2 I ð14Þ
m2Mc tB t tE t
Collection cost level uniqueness constraint (15): exactly one collection cost level
must be selected in every period.
X
zt;i ¼ 1 8 t 2 T ð15Þ
i
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Technology and Capacity Planning For The Recycling of Li-Ion EV Batteries in Germany

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J Bus Econ (2015) 85:505–544

Technology and capacity planning for the recycling

Claas Hoyer • Karsten Kieckhäfer •

Published online: 4 September 2014

Abstract Currently, the German government strives for establishing Germany as

C. Hoyer (&) K. Kieckhäfer T. S. Spengler

Keywords Strategic network design Reverse logistics Recycling Lithium-ion

JEL Classification M11 K32 C61

Based on the objective of the German Bundesregierung, a stock of one million

LiBRI and LithoRec. In LithoRec II, a consortium of automotive, battery, and

2 General conditions and planning tasks for the recycling of lithium-ion

2.1 Recycling processes for lithium-ion batteries from electric vehicles

To establish a recycling network for spent lithium-ion batteries from electric

batteries to the redistribution of recyclables. Strategic planning tasks particularly

Reverse logistics providers, who typically embrace logistics service providers as

2.3 Literature on strategic planning of product recovery networks

encouraged producers to deal with product recovery (Fleischmann et al. 1997,

details. In particular, technical processes are usually modelled on an aggregated

3 Development of a model for technology and capacity planning in recycling

3.1 Concept of the model

In order to determine efficient investment plans with regard to the number of

Decentralisation effects are considered in the collection of products. In difference

The material and energy flow is determined by the transformations of products

Fig. 2 Material and energy flow in the recycling network

depicted by activity analysis. The transformation executed by an activity a 2 A in a

The activity-analytical approach is illustrated in Fig. 3, considering only

Fig. 3 Modelling of transformation by means of activity analysis

Uncertainties are accounted for by defining different scenarios and conducting

3.2 Implementation and complexity of the model

The mathematical optimisation model derived from the illustrated concept is

4 Application of the model for the planning of the recycling of lithium-ion

The application of the model is intended to support potential investors in deciding

4.1.1 Common data

With regard to the modules, each of the three LithoRec technologies

4.1.2 Scenario-specific data

The scenario-specific data comprises of data that is classified as particularly

Table 1 Capacities, abbreviations, operating times, and factors of the modules

Factor class Factors f Unit Mass [kg/Unit] Activity vectors vm;a;f 8 m 2

include repair, maintenance, insurances, administration, and management. These

Disassembly small 560,000 672,000 227,000 272,400 20

Scenarios Basis Moderate High Low 1 M 2020

Spent battery mix

4.2 Application of the model and evaluation of the results

4.2.1 Impact of uncertain developments

Scenario Basis High Investments

Fig. 6 Investment plans for four out of five scenarios

Secondly, a small plant for mechanical conditioning is installed in 2015 instead of a

Net present value 159.4 25.9 152.1 -47.8 610.1

Fig. 7 Aggregate cash flows by origin

Net present value [M EUR] 25.1 152.0 -41.4

4.2.2 Impact of the mandatory minimum recycling rate

5.0 0.3 0.3 0.3 0.7 0.2

Disassembly Mechanical conditioning Hydrometallurgical conditioning

earlier installation of plants increases the investor’s risk, as he has to invest at a

4.2.3 The perspective on individual actors

As has been discussed, in reality, a recycling network typically consists of

Basis Moderate Prices High Investments Low Economic 1 M 2020

Fig. 10 Net present values contributed by the actors

Network w/o collectors 181.6 2025 30

5 Discussion and conclusion

1. the envisaged recycling process consists of multiple stages and different

integrates multiple products (end-of-life electrical and electronic devices) and

Appendix: Mathematical formulation of the optimisation model for technology