Hope or Only Hype for Residential V2G?

Recently, media outlets and industry forums have speculated that Tesla vehicles are vehicle-to-grid (V2G) capable. While Tesla has neither confirmed nor denied this rumor, it has sparked discussion around why Tesla doesn’t offer V2G (if true), if they would ever enable that feature in the future, and if they are planning to someday aggregate the vehicles for grid services.

Few topics in the EV space have elicited such strong and visceral opinions as residential V2G. Some V2G proponents (including SEPA member, The Mobility House, in a February 2020 blog) see it as a vast resource for grid operators, an accelerant for vehicle manufacturers, a benefit for vehicle owners, and an opportunity for smart grid solutions providers.

Others, like Graeme Cooper from National Grid’s U.K. offices, see V2G as “an engineer’s answer to an engineer’s problem – ignoring so many externalities… European car OEMs are shying away from V2G (only Nissan is engaged) adding complexity, risk, and cost.” Cooper sees bigger opportunities with larger duty-cycle vehicles and fleets, which may have interest in V2G if the leased vehicles included bundled energy, services, insurance, and other perks.

Over the past several months, I’ve been ‘poking the bear’ on LinkedIn to gather a full range of opinions about the technology. Below is a summary of the major points of debate on residential V2G:

V2G Opportunities

• Automakers and charging infrastructure manufacturers are planning for V2G capable equipment: Beyond the current V2G capabilities of vehicle brands such as Nissan, the industry has seen other V2G announcements, such as the 2021 Lucid Air, which is warrantied for its 19.2 kW AC bidirectional V2G system. V2G chargers already exist, such as the Fermata Energy V2X capable, UL listed charger. More products are on the way from ABB, IoTecha Corp, Rhombus Energy Solutions, and Lucid Motors. CharIN has developed a V2G roadmap that outlines the implementation of various capability sets through the CCS Connector that many automotive manufacturers are adopting.
• Battery conditioning: V2G controls could provide battery conditioning services to extend the lifetime of the battery, compared to traditional charging. In this SAE paper, Honda ran degradation testing assuming charge-discharge patterns for market participation with positive results. (See also materials from Transport Evolved, the Energy Journal, and the Energy Policy Journal).
• Distribution and renewable energy optimization: V2G could offer another tool for utilities to minimize grid impacts and prevent renewable energy curtailments.
• V2G value stacking potential to accelerate EV deployment: Some proponents speculated that with potential V2G values, EVs could essentially become free for the consumer. The vehicle OEM, or other aggregator, could make money through V2G and VPP services for the utility. In markets that enable large-scale aggregation, the value stack could include:
  • • Vehicle batteries integrated with PV to sell services via long-term PPAs
    • Non-wires alternative planning (depending on the regulatory and market rules)
    • Ancillary services
    • Short-term energy and capacity
    • Forward capacity
    • Peak/off-peak price arbitrage
    • Further, V2G could be used for demand charge management. For example, Peak Power Inc is exploring how to deliver existing electricity market revenues directly to EV owners (individual and fleet) via V2G applications in Toronto.
• Future proofing infrastructure solves future problems: As EV adoption grows, enabling V2G functionality will help improve everything from generator emissions, to local or regional distribution and transmission impacts, to providing a storage solution for renewable energy development.
• Potential alternative to stationary storage: New research from The Brattle Group suggests that 20 million EV batteries will contain up to 1,600 GWh of energy storage capacity, and can provide up to 300 GW of power output through V2G. This V2G storage capability vastly exceeds the grid’s current and projected storage capability.
• V2G can fit into the consumer lifestyle: As average vehicle models have increasingly large batteries (upwards of 200-300 miles of range), the consumer could charge and discharge some portion of that battery if they don’t need the full range on a regular basis (the average U.S. driver goes less than 30 miles per day).

V2G Barriers

• Battery degradation and warranty issues: While battery conditioning presents an opportunity, poor charge management, rapid charging and discharging, and high added number of cycles could negatively impact the lifespan of a VGI-capable battery. However, some proponents contend that there could be opportunistic uses for V2G. A 2015 study by Plug In America examined the battery amortization costs of V2G (see graph below). V2G participants would need adequate compensation for these impacts. Ideally, aggregators will develop plans to efficiently and cost-effectively swap out batteries at the end of their useful life, potentially recycling or using those discarded battery packs for other grid management purposes. Further, automakers base a battery warranty on mileage, and most do not want to extend coverage to include V2G, presenting a risk for consumers who have a car under warranty.
• No defined value in utility and wholesale markets: One opponent of V2G cited the “lack of harmonization of value in the electric utility industry” as a major barrier to adoption. While onboard V2G technology is the same worldwide, the value of V2G services varies widely between ISOs/RTOs, vertically-integrated utilities, electric cooperatives, G&Ts, and public power utilities across the country/world, resulting in additional costs for vehicle manufacturers and charging vendors. Further, utilities and wholesale power markets haven’t defined which V2G services have value, and how much they would pay for those services. Utilities and wholesale power markets must define what services they want, simplify rules for participation, and provide adequate compensation. Many are waiting on additional rules for FERC Order 841 to see how V2G will bid into fast regulation markets.
• Customer value is not well-defined and may not participate: One opponent believes that the infrastructure costs and low level of interest in energy issues by the typical driver will prevent the concept from reaching scale. Given relatively small price signals, lack of net metering/export tariffs, and the absence of a sophisticated aggregator/business model, it isn’t clear how much residential consumers could save from energy arbitrage. Without a strong value proposition, a customer with an expensive EV is unlikely to go through the process of understanding the program, signing the contract, monitoring their monthly statements, etc. for a very small monetary benefit. The consumer would need a fundamental shift in mindset from using their car for transportation to using it to make — potentially limited amounts of — money. Similar to energy resilience, people place a high value on the utility value of a vehicle, particularly in emergency situations.
• Additional EVSE incremental expense: Some initial V2G-capable chargers on the market are substantially more expensive than their networked and V1G capable counterparts. For example, the Wallbox residential V2G-capable L2 unit is expected to sell for around $4,000, compared to a V1G-capable EnelX Juicebox, which sells for approximately $650.
• Potential ratepayer impacts: One opponent suggested that new technology deployments cannot be at the expense of other ratepayers. Rate reforms must include both rewards and penalties (often customers only get a reward) for certain charging behaviors, and ensure that non-EV owners won’t be penalized. Another opponent believes that while subsidies can kickstart an industry, sustainability and certification is required for real investment. Rather than focusing only on rates, the industry should consider if current utility business models create an environment to smooth the integration of EVs at least cost to consumers, or if the industry should rethink how it assesses infrastructure buildout and capacity requirements.

Another option would be to focus first on vehicle-to-home (V2H), vehicle-to-building (V2B), or off-grid services and then eventually enable V2G as regulations, business models, and technical challenges are resolved. For example, Audi has researched opportunities for its own vehicle-to-home product using the e-tron and the CCS combo connector. It would be a simpler use case for residential customers and would provide an alternative to a traditional home battery storage unit. The on-board storage also has significantly more capacity than most residential units, meaning customers could have power for longer periods of time. This also offers significant advantages compared to conventional backup generators (i.e., cleaner, less noise, and no liquid/gas fuel storage requirements).

Further, depending on the application, the EV battery may suffer less degradation due to less frequent discharge cycles. The use case becomes even more compelling if combining V2H with residential PV (e.g., IEEE paper). Some companies also hope to leverage EVs for off-grid uses, such as outdoor festivals and events. One company looking at this option is the AirQon project, which aims to eliminate diesel generator use at these functions.

Learning from the U.K. 
In the U.K., OVO Energy’s subsidiary (Kaluza) created Project Sciurus, the largest residential V2G trial in the world, which is targeting customers with Nissan LEAFs. Participants received a free V2G charger and an OVO app to create settings for their car, including ready-by times, minimum charging level, and boosted charging. Their platform sends updates to the charger to direct the vehicle to export or import its energy in order to save the consumer money. Kaluza identified a number of preliminary issues with the project (which is still ongoing), including:

• Handling the high volume of customer inquiries.
• Presenting energy data to the consumer to clearly highlight the promised energy savings.
• Managing consumer concerns about battery health if the vehicle is constantly being charged and discharged. Despite conflicting data, Kaluza claims their system can improve battery health by 10%.
• Policy issues that led to an inconsistency of installation permissions and costs across the U.K. Without policies supporting the adoption of V2G, OVO was left to cover many unforeseen installation costs.
• Difficulty in scaling V2G and the adoption of the EVs among their customer base.

Communications Protocols are Key to Eliminating some Barriers
Some of the barriers to V2G adoption in the above list could be addressed through the standardization of communications which can reduce complexity, costs and time for installation as well as utility interconnection costs.

As discussed in SEPA’s latest EV report, Guidelines for Selecting a Communications Protocol for Vehicle-Grid Integration, written in partnership with Kitu Systems and QualityLogic, utilities need to understand and define the necessary communications architectures for sending and receiving messages to the vehicle. One aspect of residential V2G – and vehicle-grid integration more broadly — that is not typically discussed, is related to the precision, reliability, security, and the cost of coordinating potentially many different industry actors.

Beyond sorting out communication architectures and protocols, the utility and EV industries should also examine other standards, such as hardware requirements and building standards, to support the use of V2G and V2B for customer resiliency, as well as modify utility plans for Power Safety Power Shutoffs (PSPS).

Should the U.S. invest in residential V2G?
While the future of residential V2G remains unclear, opportunities exist for utilities and the EV industry to experiment with the technology to provide values above and beyond managed charging. Today, the value of residential V2G would be significant in certain use cases. For example, the city of Cordova, Alaska operates a hybrid microgrid that is not connected to a transmission source. According to a June 2020 Cordova Electric Cooperative presentation, the community could balance their local grid with 16 Nissan LEAF’s using residential V2G at a significantly cheaper price than a dedicated Battery Energy Storage System (BESS).

Further, opportunities exist to pair V2G with microgrids, which could provide complementary benefits as discussed in a recent SEPA blog, Microgrids for Fleet Electrification. For example, V2G could be a potential source of electricity in emergency situations, adding to the resilience value of microgrids. Projects are currently being developed to test the viability of V2G technology with microgrids, such as Snohomish PUD’s Arlington Microgrid Project in Washington State.

Utility Programs are Critical to Unlocking Residential V2G
Based on my research, I believe there is hope for residential V2G. While certainly not a perfect option for every consumer, some early adopters will likely participate in pilot projects. These early days will be critical to understand consumer needs, tolerances, and incentive requirements. Like other behind-the-meter customer DER programs, we must design use cases and programs that work, and we won’t be successful without trying many different things.

The biggest debate about residential V2G concerns how customers could make money on the incremental investment for a L2 residential bi-directional charger. Barriers include:

• Traditional net metering doesn’t pay enough — typically residential energy exports are equal to or less than retail energy.
• Without a large delta between on-peak and off-peak time-of-use rates, the potential savings are not worthwhile for the average EV driver, given the inconvenience.
• For customers that value self-supply, they aren’t minimizing future electricity price increases, as with solar.

One potential solution: Utilities could introduce an EV export tariff to drive down costs and improve V2G technology as they did 10+ years ago for residential solar with a feed-in tariff (FIT). Utilities would gain access to storage at a competitive price, while incentivizing more EV adoption.

Regardless of near-term V2G use cases, in the long-term — our industry should continue to be prudent and thoughtful about program design approaches, intended goals, and how we define success for V2G programs. As always, I’d encourage you to share your thoughts with me through SEPA channels and my LinkedIN page.