VW Vehicle-To-Grid Is 15 Years Too Early, Except Maybe In Texas

Volkswagen (not Voltswagen after all, sadly) is creating some hype recently with its announcement that its Modularer E-Antriebs-Baukasten (MEB) platform will include vehicle-to-grid (V2G) capabilities starting in 2022. There’s only one problem with that: the company is probably 15 years early.

It’s not that I don’t think the rolling stock of batteries won’t be useful and used for vehicle to grid applications, I just think that V2G specifically is a late-stage decarbonization lever and requires very significant numbers before utilities will be interested. Other opportunities provided by vehicle batteries will be exploited and of value much earlier.

I see the growth of vehicle battery exploitation approaches on the grid following different curves.

Chart by author

The first model, building smart charging, has immediate benefits. It enables a building with a growing number of EVs to balance EV charging over the span of the night. This allows the building owners to defer significant grid connectivity upgrades for added load, possibly indefinitely, and avoid peak demand charges ($5.95 per kW of demand at peak hours for BC, as an example I have at my fingertips). This will also automatically reduce peak demand for utilities without them having to do anything at all. This can be balanced against the rest of a building’s load with very little instrumentation and minor IP connectivity. Service level agreements for customer charging will ensure residents of the building with EVs will have sufficient range for what they need to do.

Pro-tip to building managers: When wiring your buildings for EV charging, make sure that your EV charging supplier includes automatic load balancing like this.

The second model, aggregated grid demand management, will allow EV charging network operators to engage with utilities in the way that major demand draws do today, but through aggregated EV charging instead of point source major demands such as electric steel minimills and aluminum smelters. You need to be able to shed megawatts of demand with the press of a button, and individual cars are irrelevant to this. In looking at one utility’s load shedding contracts, the smallest unit that they contracted for was 5 MW. Given the primary requirement of having EV owners have sufficient range, thousands of cars in a demand region need to be remotely controllable before this starts being a viable business model. This model has been projected and studied, but it’s a mid-term opportunity.

There will be utility-catchment areas where this is already becoming of value due to the higher penetration of EVs. Jurisdictions such as California, Norway, China, and British Columbia, Canada come to mind. That last is in part the nature of the Pacific Northwest’s environmental consciousness, but also had an unexpected boost when the largest Canadian province, Ontario, elected a new government which chose to eliminate EV incentives along with 758 renewables contracts. The Teslas destined for Ontario mostly went east and west to provinces which maintained their sensible focus on the future.

Having worked in modernizing legacy software systems in multiple industries around the world and assessed the ability of utilities to adapt rapidly, the likelihood that utility energy management systems will still be on expensive-to-change legacy code, including green screen SCADA interfaces, is high. The ability of utilities to perform the aggregation role is low, in other words, and charging network operators will step into this breach.

The third model, which VW is promoting, is vehicle-to-grid. In this, the batteries in the EV provide electricity back to the grid during peak demands, not just avoiding creating demand. To be sure, VW’s capabilities undoubtedly also include the interfaces for basic demand management, but the company is promoting V2G. That one requires a lot more from EV owners, and hence will require a lot more EVs to be aggregated, in the tens or hundreds of thousands, before owners don’t see enough drain to care. This opportunity is also challenged by utilities having the ability to draw upon tens of thousands of small batteries, and will also likely require intermediary operators.

It’s possible that VW is in an unusual region. A very early proof-of-concept of a blockchain-enabled EV battery charging solution was running in Europe in 2018 when I was acting as national blockchain architect for a major technology services company and wrote a substantive report on cleantech applications. VW may be thinking that a distant opportunity is a near-term one, but I think that it is wrong.

There’s a sideline opportunity for V2G which is treating a car like a Tesla PowerWall for home use, one that VW mentions in its promotional material. That is useful for areas with poor grid reliability, like Texas and a few other US states which have seriously underinvested in grid resilience to maximize utility and generate profit at the expense of the lives of residents. Tesla owners in Texas simply moved into their cars for a couple of days and stayed warm that way, avoiding the carbon monoxide poisoning hundreds in the state suffered.

If you live in a place with an unreliable grid, the VW V2G capabilities might be useful. Or they might not. Having a regular plug on the vehicles as the Tesla Cybertruck does is probably a lot more useful to the average person, and ensures that they aren’t losing electricity to everybody in the neighborhood instead of keeping it in the home. The famous hybrid pickup truck generator model would be more appealing to the average user than having their battery drained for people on the next street over.

While I think that of the major vendors VW is most likely to thrive in the transition to fully electric vehicles, and that its MEB platform is clearly superior to BMW’s anything-you’d-like platform, VW’s vehicle-to-grid offerings are so early that they are best thought of as an experimental platform out of which something useful might be grown in the future.