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The Path to a Vehicle-to-Grid Future

Is a vehicle-to-grid future possible, where bidirectional chargers allow electricity to flow from electric vehicles back to the grid during peak demand? Given the current state of electric vehicle (EV) technology, coupled with existing pilot projects, we believe it’s more suitable to ask: what useful vehicle-to-grid applications can we implement today, and what valuable benefits await to be unlocked in the future?

Vehicle-to-grid, or V2G, is actually a single, albeit sophisticated technology within a broader suite of EV charging grid services known as vehicle-grid-integration (VGI). As we’ll highlight below, companies today have the opportunity to develop business models around currently viable VGI goals such as load shifting and peak shaving. Deploying unidirectional power flow charging mechanisms, often referred to as managed charging or V1G, will reduce charging costs for EV owners and pave the way for bidirectional innovations such as vehicle-to-building (V2B), vehicle-to-house (V2H), and vehicle-to-everything (V2X).

Driven by economics
Without VGI energy management, EV charging in California in 2030 will increase peak demand by 4.9 gigawatts (GW) according to E3 (image below). Serving this new load would require massive capital expenditures to build out generation, infrastructure, and transmission. Another recent study from Hamburg, Germany showed that upgrading the city’s grid to meet expected EV load could cost 10x more than implementing a smart VGI charging system.

Implementing VGI offers a solution for California to eliminate added EV charging costs and help empower the state to reach its ambitious clean energy, zero-emission vehicles, and greenhouse gas reduction goals.

Considering that EVs are essentially batteries on wheels, leveraging EVs as energy storage is another opportunity not to be overlooked. A 2018 study authored by Lawrence Berkeley National Laboratory scientists analyzed the potential value of utilizing EVs instead of new capital outlays for grid-scale stationary storage. The study projected 500,000 battery EVs and 1,000,000 plug-in hybrid EVs by 2025 in California. The image below depicts the results.

The left chart illustrates that EVs with V1G-only mechanisms (at a deployment cost of less than $150 million) could provide 1GW of storage capacity in California, equating to a net cost savings for renewables integration of $1.3-1.6 billion. The right chart shows the value added by stacking V2G capability with V1G, equivalent to $12.5-15.4 billion for 5GW of stationary storage.

According to the study, even limited introduction of EVs capable of V2G functionality would far exceed California’s Storage Mandate of 1.3GW and at substantial cost savings. “In other words,” the report says, “the California Storage Mandate can be accomplished through the [zero-emissions vehicle] ZEV Mandate, provided that controlled charging is also widely deployed.”

Case study: electrifying an island with renewables

Similar to other islands, the Portuguese island of Porto Santo was mainly powered by dirty diesel generators at hefty prices due to fuel importation costs. In response, the local government sought to make use of abundant sun and wind resources, but ran into intermittency issues that sidelined their progress.

In partnership with Renault and the utility company EEM, The Mobility House introduced the concept and benefits of VGI and V2G, ultimately developing an ecosystem of V1G EVs, V2G EVs, and stationary second-life Renault vehicle batteries to interface with the island’s renewables. The Mobility House built upon its energy Marketplace, as well as its smart charging platform, ChargePilot, to optimize the flow of electricity to and from batteries, both stationary and in EVs. The Marketplace aggregates the EV chargers and 2nd-life batteries, and responds to price signals from the utility to harmonize the demand and supply of different energy producers and consumers across the island. Based on vehicle departure time and required battery state of charge, the Marketplace optimizes when vehicles charge and discharge while ensuring that the battery has sufficient energy when the vehicle needs to depart.

The results indicate that CO2 emissions and costs have declined, while grid reliability and wind and solar utilization has increased.

Latent demand of EV fleet operators
Companies need not wait for V2G technology and policy to mature in order to generate profits. Fleet owners have the opportunity to capture value via managed charging (otherwise known as V1G or smart charging).

VGI expected revenue

With managed charging, EVs can be controlled remotely and timed to charge according to the needs of the grid, similar to demand response programs. In the aggregate, EV managed charging can shift load to flatten demand peaks and shed consumption during periods of scarcity. According to E3 (image above), VGI expected revenue from a simple plug-in and charge setup can provide benefits of $345 per EV per year. Load shifting in California alone could provide an estimated $1 billion of value from 2018 to 2030 (image below).

Load shifting market size and potential value

The benefit of managed charging is even more pronounced for EV fleets. One prime example is electrifying school bus fleets. Excluding the obvious health and environmental benefits, three main reasons contribute to the unique opportunity for school buses:

  1. Defined, consistent daily routes require relatively simple energy management planning
  2. Less frequent use during summer months, when the grid experiences the most stress
  3. According to various models, including one calculated by the California Energy Commission, the total cost of ownership (including programmatic funding) of electric school buses is near parity with traditional diesel vehicles

Electric school buses also have the potential to generate additional revenue due to their large battery capacities. Providing backup power via V2B functionality, and offering ancillary services such as frequency response, primary and secondary power reserves, arbitrage, voltage control, and congestion management can further bolster their economic case.

Case study: EV benefits to a stadium

The Johan Cruijff ArenA in Amsterdam, home to the Ajax soccer team, houses managed charging and V2G technologies that supplement the stadium’s solar and battery storage system. During non-event days, The Mobility House opts the system into revenue-generating ancillary services such as frequency response, but during events such as Champions League soccer matches and Ed Sheeran concerts, bidirectional EVs and stationary storage stand ready to shave expensive load peaks and provide backup power if necessary.

In the future, visitors who park in one of the stadium’s 2,400 parking spots will be able to provide energy to the ArenA with their EVs in exchange for monetary rewards or premium parking. Smart stadiums and similar use cases that require large electrical demand for short periods of time can use VGI to capture untapped monetary and operational value.

Next steps
As the case studies highlight, VGI, and specifically V2G can provide the flexibility and storage necessary to accelerate renewables deployment at a fraction of the cost of traditional stationary storage options. However this exciting future is far from certain. The path to a fully-functional V2G future will rely on technological and political advancements that lay the groundwork for companies to create and capture value.

From a technical standpoint, bidirectional chargers and vehicle manufacturers need to further realize cost reductions, and the broader industry must converge on and adopt common communication protocols. The industry can help to future-proof infrastructure by educating electric vehicle supply equipment (EVSE) purchasers about communication protocols that enable energy management to allow for sustainable costs.

Policymakers should encourage innovation through policies that reduce barriers to bidirectional electricity flows, similar to policy advancements around solar net metering. Incentivizing managed charging and V2G should be included in policy and regulatory conversations. This includes EV time-varying rate programs that incentivize customers to charge at appropriate times. Additionally, wholesale markets should allow for VGI aggregator resource participation.

VGI is essential to meeting ambitious CO2 emission reduction goals, and provides flexibility to the grid by mitigating the infrastructure cost of mass EV adoption. The path forward will be driven by economics and built upon the foundation of currently viable pilot projects. VGI can serve as a catalyst for the EV and energy industries, leading to mutually beneficial value in both the near and long term. Today, by way of managed charging and in the future by realizing full vehicle-to-grid capabilities.

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