During its Power Day in March, Volkswagen said it was moving ahead with vehicle to grid (V2G) bi-directional battery charging technology. Now it’s official. In an interview with Handelsblatt this week, Volkswagen board member Thomas Ulbricht said, “The test vehicles are running. We are in the last [phases] with the preparations.” Beginning in January, 2022, every electric car from the Volkswagen Group that uses the MEB electrical platform — that includes cars from Audi, Skoda, and Seat-Cupra — will be able to not only charge from the electrical grid but also able to return electricity to the grid on demand.
As Zachary reported on March 20, 6,500 GWh of renewable energy is not used in Europe each year because of a lack of energy storage. That’s enough electricity to power 2.7 million electric cars for an entire year. Grid operators could store that electricity in car batteries if they had the technical and regulatory ability to do so. That’s exactly what Volkswagen intends to make possible with its new V2G technology.
“Volkswagen is setting things in motion,” says Stefan Bratzel, professor at the Center of Automotive Management at the Bergisch Gladbach University of Applied Sciences. “The amount of stored energy traveling around on four wheels is much greater than any utility company will ever build and put on the grid,” adds Gerbrand Ceder, professor of materials science and engineering at the University of California.
A Business Opportunity
V2G could be used to store electricity from a rooftop solar system and feed it back to a home. The idea is similar to a residential storage battery that costs up to $10,000, including installation, and can power a home for several hours or perhaps a day. The difference is, the battery in an electric car could power the same home for a week or more and it is more or less free, since the car is usually parked outside for 12 or more hours a day. “Free,” of course, is a relative term. Using the car’s battery in this way will shorten its useful life and that implies there is an economic cost to doing so.
But Volkswagen thinks it has an answer — use the electricity stored in a car’s battery to put money back in the owner’s pocket. It’s just another way of conceptualizing the car of the future as a potential revenue source. Ulbricht explains that expanded business models relating to the battery are just one component of a much more fundamental change in the automotive industry that will be triggered by digitization. “Everything is going to be digitized, except maybe the tires,” he says. A whole range of new ideas and business models will emerge from digitization and the entire automotive industry is involved in re-imaging the cars of the future.
Volkswagen sees itself monetizing all that stored electricity by making it available to utility companies and grid operators. Some of the income would go to the owners of the cars and some would flow into the company’s corporate coffers. “This creates a situation from which everyone involved would benefit,” says Ulbrich. Grid operators could also seek to tap into all that stored electricity. “It is left to free competition who the customer ultimately decides on,” Ulbrich explains.
Handelsblatt says in the final analysis, automakers may have the upper hand. They provide the warranty coverage for those batteries and can adjust their warranties to favor the use of their own networks. People who elect to share their stored electricity with another company, such as a utility company, may do so at the risk of reduced warranty coverage.
V2G In California
Green Car Reports says the California Public Utilities Commission is moving forward with a study of V2G technology, an effort spurred by the spate of recent wildfires and rolling blackouts in the state in recent years. At this time, the CPUC is simply looking at how the technology could fit into its regulatory framework, as well as existing grid infrastructure.
A 2020 study by the Columbia School of International and Public Affairs looked at V2G technology in California and made the following findings: “Our results show that for peak shaving with residential customers, VGI is more cost-effective than home storage or demand response. For peak shaving using large municipal, commercial, or industrial consumers, VGI with a fleet of school buses is less cost-effective than demand response but more cost-effective than distributed storage. For home power backup, VGI is equally as beneficial as storage, though both are only cost-effective as add-ons to a pre-existing VGI or home storage program. Ultimately our model shows that VGI is most effective when it combines services into a single program.”
In other words, V2G may be coming, but it is not here yet. With the impetus added by Volkswagen’s plan to make every MEB-based car it builds V2G capable as of the beginning of next year, however, the topic is moving from the sidelines to center stage. If people come to believe they can earn income from connecting their car to the grid or power their home in the event of blackout, those could be significant incentives to ditch the old gasmobile and join the EV revolution.