Value proposition for vehicle owners
This becomes a potential revenue source for vehicle owners: fleets can charge their EVs when electricity is cheap, store it in the vehicle battery, then release the energy back to the grid when it’s more expensive and profit off the difference.
The benefits of V2G go beyond the monetary. Vehicle owners can leverage V2G for added resilience as the EV’s stored energy can become a valuable power source. As example, the school bus use case is an interesting one: in disaster scenarios, buses could provide the energy to power school buildings, turning into a self-sufficient grid if electricity is cut off. Energy would not be going back into the grid in this case, but be used to create a self-sufficient network within a facility.
Industry researchers also point out that V2G could especially benefit EV fleets with low vehicle utilization rates. Jessie Lund, a senior associate at the Rocky Mountain Institute explains that for these fleets, the significant investment in the vehicle and battery are hard to justify simply through operational savings such as electricity costs and reduced maintenance. This is because the vehicles simply aren't operated enough. Adding in V2G as an additional profit source could be the tipping point to make electrification pencil out economically.
Viability and challenges
At the same time, there’s a tension between operating a fleet and trying to make money on the energy transaction. In an ideal world, you could use vehicles for both moving goods and energy storage. But those two goals could become conflicting priorities as a fleet's schedules and operational demands are pitted against using vehicles for energy transactions.
Moreover if V2G is going to become a reality, it will take coordination between a host of stakeholders: energy utilities, electric vehicle OEMs, charging suppliers, regulators, and of course fleets. The technology needs to be supported by the hardware and the utility themselves. Lund describes, “both the vehicle and the charger need to be capable of bi-directional charging - which many aren't today - and utilities and regulators need to develop processes for managing this capability and compelling business cases for vehicle owners to participate.”
Perhaps the greatest challenge for V2G is finding a scalable business model - one that makes sense for the vehicle owner and their energy provider. This should address questions such as how will vehicle owners be compensated for the service being provided? Who will pay for it, how much and in what form?
Pilots are currently underway to explore these dynamics, as well as how V2G may impact EV battery life, performance and total cost of ownership. What we hear is a message reiterated by industry researchers like Jessie: “V2G is technologically possible, but we have yet to prove a compelling value proposition and business case. For example, is the agreement accurately accounting for reduced battery life and performance, given the additional cycling of the battery? Then business models may be developed which are attractive for both grid and fleet managers.”
Questions to ask
It begins with asking the right questions. Though the business model is still in development, you can investigate whether V2G begins to make sense for your fleet. For those exploring the technology, below is a checklist of questions to ask as a starting point for discussion:
- Are the vehicles fully capable of supporting bi-directional energy flow?
- Has the vehicle vendor accounted for the long-term impact of V2G on battery life and range?
- How will battery warranty be impacted?
- Has the charging infrastructure been certified for V2G?
- Does the charging station model have all the needed approvals and certifications?
- Has the net financial benefit been modeled for the vehicle owner and the utility?
- Have the V2G hardware (vehicle and charging station configurations) been deployed at an actual customer site?
About the Author: Sanjay Dayal is co-founder and CTO of Electriphi Inc, a technology company that develops EV fleet and energy management solutions. He is a seasoned technology leader with over 25 years of experience in enterprise and Web-Scale platform companies including Agralogics, TIBCO, Xamplify, Versata, and Sybase.
