Imagine a future in which old electric-car batteries are deployed in neighborhoods as energy-storage systems that guard against power outages, while paving the way for wind and solar power—and more electric cars. The idea has moved one step closer with the demonstration of a boxy unit of used Chevy Volt batteries capable of providing enough electricity to power three to five average American homes for up to two hours.

Developed by General Motors and ABB, one of the world's largest electric-technology companies, the device features five lithium-ion battery packs from plug-in hybrid Volts, strung together in a new arrangement and cooled by air instead of the liquid used in their former lives on the road. The batteries are degraded below acceptable performance levels