Electric vehicles (EVs) are increasingly seen as viable grid assets. Managed charging through time-of-use rates and demand response programs is known as vehicle-grid integration and is a hot topic of conversation among utilities around the world. The potential benefit of a vehicle-to-grid (V2G) exchange is the balancing capacity that will emerge when fleets of EVs absorb excess electricity during periods of low demand and discharge it during periods of high demand.
Rocky Mountain Institute (RMI) has estimated that electrifying all of the roughly 251 million light duty vehicles on US roads today would increase annual electricity demand by about 25% — and that doesn’t include medium and heavy-duty applications like freight and public transit along with a host of other applications.
Many critics of EVs, though, are worried that the exponential increase in EVs over the next decade will overload utility capacities. Can V2G technology alter the problem of increased load demand caused by large-scale EV integration? If so, it will take 2 types of successes:
- Developing V2G technology itself
- Elevating EV drivers’ willingness to participate in V2G technology
Today’s electric vehicles (EVs) are essentially big batteries on wheels, with a significant capacity to store and discharge energy. Unlike an internal combustion vehicle, which has the sole goal of transporting cargo from one point to another, EVs offer many value streams which can benefit third parties and customers — EVs can greatly reduce primary energy consumption and greenhouse gas emissions and offer V2G energy possibilities.
Since EVs have electricity stored in their batteries, their electricity can be used to supply the grid whenever the vehicle is parked. Such reserve power would be a real plus during peak demands when large-scale adoption of EVs complicates the current energy distribution model.
The EV/Grid Relationship — Challenges That Can Be Overcome
V2G technology can improve grid efficiency, smooth the integration of renewable energy, and bring economic benefits to EV owners, according to a study soon to be published in Scientific Direct. Yet the large-scale adoption of EVs will bring new challenges to power systems and electric utilities.
Over the years, utilities have relied on a network of fossil fuel powered peaker plants that could be quickly fired up in instances where customer demand on the grid increased quickly. Concurrent and unmanaged recharging of EVs may lead to a surge in electricity demand, thereby resulting in congestion problems for power distribution and transmission networks.
V2G relationships may counter these difficulties.
EV owners who agree to participate in V2G programs have an obligation to have their vehicles plugged in for a specified number of hours per day or month. While this becomes a constant for power capacity, it also causes inconvenience to EV owners. Common V2G contract attributes typically include a cash back payment, required plug-in time, a guaranteed minimum driving range, and/or contract duration.
The Science Direct study finds that Dutch EV drivers prefer a larger amount of monthly remuneration and a higher level of guaranteed minimum battery than contracts have typically outlined. EV drivers are most concerned with discharging cycles and a long plug-in time.
Specifically, the guaranteed minimum battery level is one of the most important attributes to Dutch EV drivers. Because “range anxiety” has long been considered as a major barrier to the large-scale adoption of EVs, it could also be a barrier to V2G adoption. With the development of enhanced EV battery technology, the study authors say that guaranteed minimum battery level will not be a barrier to the widespread adoption of V2G. If fast charging can be widely implemented, there seems to be no need to worry about the setting of the guaranteed minimum battery level when designing V2G contracts.
Also, since a long plug-in time in V2G contracts may frighten people away, the authors offer 2 suggestions to aggregators:
- Set flexible plug-in time in contracts, like an average daily plug-in time (as it is in this study) rather than a fixed amount of time per day, in order to return some flexibility to EV drivers.
- Design different contracts according to EV drivers’ charging locations. In the study, the average plug-in time for Dutch EV drivers who charged their cars at home was about 15.3 hours per day, so, for this group of people, there can be a relatively long plug-in time included in the contract. Others who always charge at their work places or who use public charging infrastructures could be satisfied with a shorter plug-in time specified in contracts.
Is a Suitable Business V2G Model Possible?
The vehicle to grid market is forecast to achieve substantial growth due to exponentially increasing number of EV charging stations across the world. According to Precedence Research, the global vehicle-to-grid technology market size will attain $17.43 billion by 2027, growing at a CAGR of 48% from 2020 to 2027.
In March, Volkswagen said it was moving ahead with vehicle to grid (V2G) bi-directional battery charging technology. Critics commented that V2G specifically is a late-stage decarbonization lever and requires very significant numbers before utilities will be interested.
Right now, it seems the current market is not ready for a mature V2G business model. Technical, institutional, and standardization issues remain issues. What needs to change?
- An increased market share of EVs needs to be maintained or implemented. Government subsidies can help to stimulate the EV market, creating an essential prerequisite for implementing V2G in the future.
- Governmental regulations that define interoperable V2G standards are much needed in order to overcome the standardization barrier. Governmental regulations could be designed to guide the V2G market in the future.
- Increasing the general public’s awareness of V2G can enlarge the number of potential participants.
Two California utilities have studied V2G. Southern California Edison (SCE) announced plans for a demonstration project last year, while Pacific Gas & Electric (PG&E) announced last month that it’s working with BMW on a study involving actual EV owners. The technology is hugely versatile – indeed, Japan’s electricity utility Tepco calls it V2X, or vehicle-to-everything. The possibilities include V2V (using EVs to charge other cars), V2L (vehicle-to-load, which can be used for everything from campsites to construction sites) and V2H (vehicle-to-home).
V2G adoption will require EV owners to have a more extensive relationship with their local utilities, utilities to have a more proactive involvement with city and county officials, and a cohesive, integrated strategy across organizations, from the C-suite to individual organizational units. Policy makers, too, can help to accentuate greater V2G adoption. Incentivizing innovation and investment in EV battery technology and fast charging infrastructures can stimulate not only the EV market but also the V2G market.
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