If your device’s internal storage has been downgraded to 16GB after flashing the lollipop factory image to your Nexus 5, you need to perform a full wipe in recovery mode.
- Turn off you phone.
- Press and hold Volume Up and Power to start your device in fastboot mode.
- Navigate to „Recovery mode“ using Volume Down and press the power button. You’ll see an image of an Android robot with a red exclamation mark.
- Hold the power button and press Volume Up.
- Now navigate to „wipe data/factory reset“ and confirm „Yes – erase all user data“.
- Once finished, you can reboot your phone.
After following these steps you will have all available storage back on your Nexus 5.