This article was co-authored by Ozlem Bozyurt, Florent Andrillon, Marianne Boust and Piotr Kowalczyk.
Opportunities of V2X charging services
Vehicle-to-everything (V2X) communication and power conversion technology enable data exchanges between vehicles and their environments while creating an interconnected and intelligent transportation system. Combining EVs with this technology is creating new business models and disrupting the market. Indeed, energy stored in EVs could be used to provide energy for homes or buildings and even be part of the smart grid solution to allow price arbitrage and control reserve by supplying ancillary services to distribution network operators through the vehicle-to-grid concept.
Vehicle to Home (V2H) and Vehicle to Building (V2B) services, operating behind the meter, make it possible to self-consume the electricity stored in plug-in EVs (PEVs). Customers save on energy costs by charging their batteries outside peak hours. They can also install their own renewable energy sources to reach self-sufficiency. Vehicle to Grid (V2G) thus offers a major cost-reduction potential for grid operators, despite the operational adjustments required. A cluster of EVs can even act like a virtual power plant connected to the grid, which could also be used to optimize operations and lower risks.
Furthermore, V2G offers new revenue potential for a string of actors on the EV value chain. EV manufacturers and owners can indeed sell additional services linked to the vehicle. Start-ups are also developing to seize a piece of this emerging market. Turning to customers, the advantages are clear as well, as EVs become productive assets, generating data and enabling companies that purchase them to develop services. Revenues from V2G were assessed to be as high as €1,300 per year for EV owners, creating clear incentives to enter the scheme.
Based on our interviews with experts, four crucial points could slow down any V2G project:
- Regulatory frameworks make it difficult to resell energy to the grid
- Battery depreciation management systems, including algorithms to expand lifecycle, are not yet available
- Energy compensation models require innovative contracts and pricing technologies for customers who are part of V2G activities
- Installed EV chargers are mostly unidirectional, preventing a roll-out of V2X technologies.
Some countries, for example France, tightly control how electricity can be injected into the grid from individual producers. Multiple administrative steps are needed to receive approval, further complicating procedures, and it is highly unlikely that EV owners would be willing to go through them in order to get approval. Considerable regulatory efforts are thus needed to strike a balance between protecting the network and enabling the smooth implementation of V2G. Japan could be a role model as it is one of the first country to have standardized V2G protocols.
The impact of V2X on car batteries is highly debated among researchers. While studies have shown that the lifespan of batteries could be reduced as the maximum number of cycles Li-ion batteries can sustain is eaten by V2G use, others have demonstrated that, with the right methodologies , battery life could, in fact, be extended.
In the first case, automakers would stand to lose most as they offer car battery warranties to customers, usually expressed as a minimum number of kilometers or several years during which they guarantee the EV’s functioning. Automakers could therefore ask to share costs with grid operators if the scheme were to be rolled out. Moreover, automakers who retain ownership of batteries, for example Renault, would need to adjust their contracts with customers to compensate for the depreciation of assets. On the other hand, if V2G proved neutral or even positive for batteries, contracting would remain an issue as the revenue generated would have to be split between customers and battery owners or insurers. In either case, managing change and educating customers would be crucial, since customers’ perception and acceptance will be an important dimension.
Even though the market is still in the development stage and V2G technology is not yet rolled out, actors have already started to work on several projects and trials at different scales. A mature ecosystem of start-ups has developed around V2X solutions, generating interest from automakers and utilities. The acquisition of eMotorWerks by Enel and the purchase by Renault of 25% of Jedlix are cases in point.
Figure 1 Overview of potential value proposals around V2X
In France, PSA, Direct Energie, Enel, Nuvve, and Proxiserve, together with the Technical University of Denmark have launched the GridMotion project with the aim of evaluating savings achieved by real-life EV users who have implemented smart charging and discharging strategies. The GridMotion project goes one step further by testing bidirectional chargers and injecting electricity on the network depending on energy demand on two complementary types of users – EV private car owners and a fleet of 15 B2B EVs.
OVO Energy launched VCharge, a system enabling Nissan Leaf owners to charge their EVs with the option of selling surplus power back to the electricity grid during periods of peak demand. VCharge will initially be available to 1,000 owners of the Nissan LEAF and e-NV200 during a two-year trial.
50% of the experts interviewed believe that V2G has limited potential for private customers in the short term. Technology and, above all, regulatory and contractual issues will likely take a decade to be resolved before full-scale deployment. However, the other half believes that customers are on the way to developing new mobility and charging habits and will adapt these mobility use cases much faster than expected. Hence, the massive adoption of V2X should only be a matter of years.
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