Vehicle-to-grid Income and Analysis

Michael Giberson

If you are already a rock star and can’t imagine doing anything else, then “money for nothing and your chicks for free” may be a reasonable characterization of your situation.  On the other hand, if you’re a teenage boy picking up a guitar and hoping to attain wealth and women, you should consider the start-up costs involved.  Some discussions of “vehicle-to-grid” (V2G) revenue potential seem a bit like the “money for nothing and your chicks for free” kind of analysis.

Consider the Financial Times article, “Grids to Harness Power of Electric Cars,” a story that builds on recent V2G presentations at the American Association for the Advancement of Science meetings in San Diego.

The first experimental V2G system has just gone live at the University of Delaware, where three electric cars are connected to the grid whenever they are not being driven. “They are making five to ten dollars a day just by being plugged in,” said Kenneth Huber, technology manager for the PJM grid, which covers the mid-Atlantic states.

The two-way connection not only pulls in power to recharge the battery but also sends electricity back to the grid. V2G vehicles work like an electrical sponge, absorbing excess energy when demand for power is low, and returning some to the grid when demand is high, said Willett Kempton, project leader at the University of Delaware.

…  Prof Kempton says his project suggests that an investment in V2G technology could pay off very fast for an electric car owner. Once the technology is commercialised, the additional costs of fitting a V2G-enabled battery and charging system would be about $1,500 – and the owner could make $3,000 a year through a load-balancing contract with the grid.

V2G is economically viable because electric car owners are buying batteries anyway, so it makes sense to use them for communal energy storage. It would be much more costly for electric grids to install stationary battery banks or other storage systems dedicated to load balancing.

It is dangerous to leap to conclusions based on a newspaper summary of research, but the characterization above suggests that a few assumptions may be key.  The assumption that “electric car owners are buying batteries anyway” may mean that the V2G analysis treats the battery as a free resource, and so compares V2G revenue estimates just to the incremental costs of V2G capability and operations.

I suppose it is a perfectly reasonable assumption for anyone who is going to buy an electric car anyway, and then is considering adding V2G capability. If, on the other hand, the intention is to advocate V2G revenue possibilities as an inducement to buy the electric car in the first place, a more inclusive analysis seems reasonable.

(For more on Dire Straits, “Money for nothing”: YouTube, Songfacts.)

2 thoughts on “Vehicle-to-grid Income and Analysis

  1. For rechargeable batteries, the life is really the number of cycles they go through, not the amount of time they are used. Using them on the grid would increase the frequency of the discharge/recharge cycle and cause them to be replaced more frequently. That’s a very significant cost. Using a rechargeable battery isn’t free.

  2. This is yet another example of transferred costs not being accounted for.

    The real issue is “will that warranty on your expensive car battery be honored if you’ve used it to feed power to the grid?”. The risk/reward ratio is the wrong way.

    That’s not often discussed.

    Another example, though, that doesn’t affect the battery life, is demand-response management, which likely doesn’t affect battery life as much. And where there are real curtailment markets, then the charging station operators and car owners can fight it out…

    Another (historical) “free resource”/transferred cost example was the white boxes that turn off building air conditioning compressors at times convenient to (or “as needed” by) the operating utility — I understand that compressor life was compromised, a clear case of transferred cost from the operating utility to the building owner, with no clear compensation.

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