Electric Vehicle Owners to Get Cash Back for Selling Power to the Electric Grid in Denmark (~$10,000)

Denmark is going to be the first test market for Vehicle-to-Grid (V2G) technology, it was announced yesterday. Electric vehicle owners will be able sell back power from their EV batteries to the grid, with estimated compensation for EV owners of about $10,000 over the lifespan of the car.

Denmark has been chosen by the US company holding the V2G license because of the country’s smart grid advancements, especially the Danish grid’s ability to handle intermittent sources of energy such as wind (Denmark has nearly twice the amount of renewable energy on the grid than any other nation, percentage-wise — 34%).

The company is opening its European headquarters in Denmark as I write, and the pilot start date is planned for sometime in September. To start out, the project size will be 30 cars, but it is supposed to ramp up quickly.

This is clearly an incredibly promising technology, as it removes one of the largest obstacles to EV ownership — the added premium of purchasing the car — since owners can now earn money on their cars.

The company pioneering this technology is Nuvve and the technology was developed at the University of Delaware by Professor Kempton, who is now CTO of Nuvve, over the course of about 10 years.

(Note: you can meet with the people behind the technology — and some of the largest smart grid projects in the world — at the at the Smart Grid Applied 2011 in Palo Alto, California next week, and our readers get a $100 discount! Use the discount code “SGADiscount” at www.smartgridapplied.com to knock the price for the 2-day event down from $250 to $150.)

How Nuvve Works

With EVs typically sitting parked 95% of the time, their batteries — the most expensive components of the car — are sitting underutilized. Kempton and his team have found a way to capitalize on that.

The EV owner makes the battery available to Nuvve during a given period and, depending on supply and demand in the grid, the company uses the car as a short time energy storage solution in order to help regulate the power frequency of the grid. The value of providing these regulation services is very high. Nuvve’s calculations show their business model compensating each individual EV owner $10,000 over the life of a vehicle depending on market price and owner commitment.

“For a long time, we’ve been talking about the EV as an integrated, stabilizing factor in the intelligent grid,” Clean Tech Investment Manager Anita Kjøller Nielsen from Invest in Denmark, Silicon Valley says. “But the partners that we introduced to Nuvve all but agreed they had not expected this technology to be ready for another 4-5 years. Nuvve launching in Denmark now not only creates jobs, it also helpsstrengthen Denmark’s green technology cluster and its position as one of the leading smart grid nations in the world.”

Why Nuvve Has a Competitive Advantage in the Frequency Regulation Market

My contact from Smart Grid Applied who shared this information with me, included the following key points on Nuvve’s competitive advantage:

The need for frequency regulation in electric grids arise from the fact that grid connected equipment may suffer damage and the grid may lose reliability if the frequency is not tightly maintained at 60 Hz.

There are already solutions to achieve frequency regulation today: gas turbines, pumped hydro, compressed air, fly wheels, and large battery installations such as NaS batteries are all competing for the market. All these solutions require large capital investments and operating costs, though.

The solution from Nuvve aggregates existing EV batteries that have already been paid for by the EV customer. There are no fixed or installations costs associated. Batteries have been recognized as the best solution in order to cover the fast response needs that cannot be covered by some of the other solutions. Nuvve’s system can respond in less than 1 second, covering for these fast and high value needs.

This means that the Nuvve cost structure is superior to all the above-mentioned solutions when it comes to offer frequency regulation services. This is true in regulated as well as unregulated markets.

Several good points there. Promising technology.

Clearly, there is no better place than Denmark to try this out, and being closely connected to the European grid, if things go well, the company could quickly expand into Germany and the Netherlands.

Your thoughts? Is this totally cool or am I missing something?