A potentially lucrative new market is emerging around the exchange of energy between plug-in vehicles and the electrical grid, particularly as more low-carbon power generation sources come online.
So-called vehicle-to-grid (V2G) technologies are enabling electric vehicle (EV) batteries to provide ancillary services to the grid that can complement intermittent renewable energy sources or shave demand during peak hours -- something utilities, automakers and consumers are seeing as a business opportunity.
According to a new report by Navigant Research, global V2G frequency regulation revenue is expected to reach $190.7 million by 2022. North America represents the strongest initial market opportunity for EVs as a grid service.
The U.S. Department of Defense is making a big bet on V2G technology as a way to reduce dependence on foreign oil and cut down on its enormous energy bill. Earlier this year, DOD announced it will invest $20 million to test 500 V2G-enabled electric cars, the largest pilot project of its kind (Greenwire, Feb. 5, 2013).
Several large automakers, including Toyota Motor Corp., General Motors Co. and BMW AG, are also interested, viewing grid services as a way to boost the value of the EVs they produce.
But while it's technically feasible to hook electric vehicles up to the grid and leverage their energy storage capacity, it may not be all that desirable in practice.
One problem is that vehicles are inherently mobile. While the average commuter EV sits idle for most of the day, making it an attractive grid resource, the vehicle must always be able to serve its primary function as a source of transportation. Drivers need to have confidence that their EV has enough charge to get them from point A to B. Managing the unique demands of each grid-tied vehicle could make for a logistical nightmare.
"There's no technical reason why you cannot do this, but there are a whole bunch of operational and customer-centric reasons why you wouldn't," said Ulric Kwan, electric vehicle manager at Pacific Gas and Electric Co. (PG&E).
And while it's technologically possible, V2G communication still has to overcome a number of technical hurdles. Bidirectional communication software for exchanges between vehicles and the grid still needs to be developed, and stakeholders need to settle on a standardized means of communication, such as a 3G Internet connection or via the EV charger.
Software on existing grid networks also needs to be updated. Wholesale electricity markets were designed to deal with an aggregated load worth hundreds of megawatts, not small, vehicle-sized generators that move around and have constantly changing energy capacity.
"It's just not something the software was built to handle," Kwan said.
A more modern grid could welcome EVs
But a new opportunity could be emerging as the U.S. grid system evolves.
"We're doing a lot of grid modernization. There's a big effort with smart grid technology, upgrading grids prone to outages, and we're starting to see new generation of demand response ... and as EVs are adopted, they'll play in that system, too," said Mark Duvall, director of electric transportation at the Electric Power Research Institute, on the sidelines of the GreenBiz Verge conference last week in San Francisco.
In many ways, the timing is ripe. EV sales are starting to attain critical mass, with California alone committed to putting 1.5 million EVs on the road by 2025. Meanwhile, the cost of renewable energy is falling and resiliency concerns are driving changes to the grid.
"Utilities are modernizing the grid by increasing flexibility and resiliency. EVs are going to come in and capitalize on all that," Duvall said.
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