V2G Participants Will Need Strong Compensation To Make It Worthwhile

OCT 31 2015 BY JAY COLE 49

V2G - A Great Idea For A Stable, Greener Grid, But At What Cost To An EV Owner?

V2G – A Great Idea For A Stable, Greener Grid, But At What Cost To An EV Owner?

V2G, or vehicle to grid, is a term many electric vehicle owners are familiar with.   It is the concept of plugging in an EV a bi-directionally, usually for the benefit of the local utility when it comes under stress.

Nissan Current Markets A V2G System For Use With The LEAF In Japan

Nissan Current Markets A V2G System For Use With The LEAF In Japan

In reality, the closest most of us has gotten to a functional V2G system is seeing a demonstration at an autoshow, or reading about them in use in Japan after an earthquake, or perhaps while visiting a government test program of some type.

Basically, a V2G system is put in place to optimize (draw down) the stored power in a 3rd party energy storage system when the utility comes under demand pressure.

So rather than utilizing costly additional power supplies (most often from the least clean sources), the utility draws down the power it needs from your connected EV.

The benefit to the utility is obvious – cheap/excess power available at a moment’s notice to flatten the demand curve, which in turn, reduces both the need for costly (and underused) peak power generating options, and more often than not, the utility’s emission profile.

But what of the cost to the electric vehicle owner?  What compensation should a utility pay for the privilege of taking energy out of your vehicle when it needs it?  It isn’t just a matter inconvenience and an available EV to plug-in, it’s a matter of money.

Plug In America, and its Chief Science Officer, Tom Saxton has done the math.

Using data and surveys, and also the cost of replacing a battery pack in a Nissan LEAF (~$300/kWh) and Tesla Model S when it degrades to a point where a new battery is needed (most often assumed to be at 80% or 70%), Plug In America concludes that the utility should be paying participants a fairly steep price per kWh if they are to be fairly compensated.  The breakeven point can be as high as 40 cents per kWh.

The Plug In America study by Tom Saxton concludes as follows:

If we assume the owner will choose to replace the battery pack at a certain capacity level, we can estimate how many miles will be driven on average before reaching that level. The Model S has a trip meter than gives kWh drawn from the pack, so we can estimate total energy draw to a given capacity level. For the LEAF, EPA data is used to convert miles driven to total pack energy drawn. This analysis then gives us a battery pack amortization cost associated with cycling each kWh through the pack.

For each vehicle, we consider battery pack replacement at either 70% or 80% of original capacity to figure out a per-kWh battery pack amortization cost. The results are shown in the chart below.

V2G - Cost By kWh (via Plug In America)

V2G – Cost By kWh (via Plug In America)

As you can see from the chart above, the LEAF and Model S suggest a battery amortization cost between $0.19 and $0.40 per kWh.

As batteries continue to drop in price, we expect these numbers will decrease, but this analysis suggests at least a starting point for considering the cost to owners for participating in a V2G program, and presumably owners will need to be compensated above their amortization cost to justify the inconvenience of early battery pack replacement.

EV owners may be wondering how this relates to driving. Letting the utility cycle one kWh out and back into your car is about the same, in terms of battery wear, as driving it between 3 and 4 miles, depending on the model and how you drive. We can use the EPA ratings to calculate how many miles can be driven for each kWh. When combined with the above data, we can see the the cost in battery wear associated with each mile driven. (Note that this is just a measure of the cost of using the battery, not considering any cost of purchasing the electricity to charge the battery or tire wear, etc.)

V2G - Cost By Mile (via Plug In America)

V2G – Cost By Mile (via Plug In America)

So a LEAF owner who plans to drive it forever, just replacing the battery pack as needed, should budget between 5 and 8 cents per mile for battery pack replacements. A similarly minded Model S owner should budget between 6 and 11.5 cents per mile.

How does this compare to a gas car? Edmunds.com says that, on average, a new $30,000 car loses $17,804 in value over 5 years and 75,000 miles of driving. That’s 23.7 cents per mile. For a $70,000 car, it’s $43,953 or 58 cents per mile. So, battery amortization cost is pretty small compared to typical gas car depreciation, which just adds to the money you save driving on cheap electricity.

Plug In America, hat tip to Zan!

Categories: Charging, General, Nissan, Tesla

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49 Comments on "V2G Participants Will Need Strong Compensation To Make It Worthwhile"

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I doubt a utility would be willing to pay me enough to use my battery. They should just buy their own, the cheapskates.

at 40 cent the kilwat , don’t worry ,they will,and we didn’t go to the same math class!

I have a h2g (home to grid) perspective. Rather than rely on a car that may or may not be at home at the right time, maybe a “PowerWall” approach is better. Always there and when the pack degrades, just add another, continuing to utilize the reduced capacity as well. Replace the worst pack when you’re out of room and never touch the car.

Well, it is arguably cheaper to just use a battery that’s already bought and paid for, i.e., the EV battery.

But I don’t think it’s an “either-or”, rather, it’s a win-win for both V2G and H2G. It’s good to start developing the tech and think about the economic angle, so that things can start deploying on a wider scale in 5-10 years’ time.

By then, most new BEV battery-packs will also be bigger and more resilient, making V2G even more viable from all aspects.

First battery costs are 50% of the $300/kwhr quoted already and by the time EV’s have V2G other than stock Ford E Rangers, etc in 1999 using ACPropulsion EV controller/inverter/charger, battery costs will be $100/kwhr. Plug those real numbers in and the picture changes greatly. Next EV lithium batteries have near unlimited 10% discharge cycles making that point moot. If utilities pay peak rates EV’s will make good money though a trade like keeping EV’s charged free for the V2G when needed. It’s not just supplying the grid but also sucking up excess power in demand lulls or oversupply. Same with h2g. Solar since naturally happen at peak too should get high rates though not as much as v2g. Solar DG give 2 things utilities need most, peak power and as important, offpeak demand. EV’s will be part of a home, office, utility systems as each is basically a home size system in itself. If they paid me decently here in Fla for peak power I’d supply a lot of it but they only want to give $.08/kwhr for power worth at least $.30/kwhr. And they charge $.13/kwhr for offpeak worth $.05/kwhr. Personally most utilities should be taken over by… Read more »

jerryd said:

“First battery costs are 50% of the $300/kwhr quoted already…”

No, not at all.

First of all, you’re citing the cost for battery cells only, not the price that a consumer would have to pay for getting his car’s battery pack replaced.

Second, you’re citing an exceptionally low “sweetheart deal” wholesale cost for cells, an outlier figure not reflective of the average price.

The price cited in the article, $300/kWh, is an entirely reasonable estimate of current prices.

It is good to see a proper analysis of what V2G really cost. And as batteries become better & cheaper the trend will be down.

Here in California on hot days we have peaker plants for the very hot days, and then the peak price electricity often exceed $1/kWh, so I can imagine that win-win arrangement with V2G, for peak times.

For regular usage, our best bet is second life storage systems.

Right, it is all about the spot market. The down regulation market is probably even more interesting, get a discount just for letting them slow down your charge rate when the grid voltage drops.

Utilities don’t want to pay residential rates to homeowners with pv systems. Why would they pay that or more to ev owners?

The PV timing is not matched, like a battery compensation program would be- it’s called dispatchability. V2G has infinite dispatchability of marginal power levels (hence its use for frequency stabilization). Solar alone has increasing power levels with only “dispatchability” by coincidence.

Grid stabilization and “peak shaving” are where it will profit electric utilities to install even relatively small amounts of grid power storage. To suggest that such high frequency, low capacity usage should be provided by PEV owners is ignoring economic reality pretty firmly.

If there could be any rational scenario to use V2G, it would be only for emergency use a few times a year when the grid is really straining to provide sufficient power for a few minutes or, at most, a few hours.

But even then, as I pointed out in another comment in this thread, the same goal could be accomplished more efficiently by a smart grid encouraging reduced demand from industrial intermittent high demand consumers, over that same period of a few minutes or a few hours.

Makes that $6000 used I-miev look real good right now!!!

If it makes sense for the utility to pay a PEV owner to rent their battery, then it makes even more sense for the utility to buy their own battery.

The only way it’s going to benefit the utility to rent PEV owners’ batteries is if they pay less than a fair price for aging the battery. If they’re willing to pay a fair price, then they would be better off buying their own.

In a cooperative effort, both parties can benefit. But it seems to me in this case, it’s a zero sum game. The utility can “win” only at the expense of the PEV owner, or vice versa.

Another blanket statement turns out to be wrong in real life.

Serious grid strain occurs in severe weather, a few times per year in most climate regions (varying with climate and region, of course). In these ‘perfect storms’, spot rates jump to 40c and well past. So the question is not so much battery wear as driver scheduling.

Think of it as replacing emergency generators, not peaker plants.

Thanks Jay for an interesting post. I enjoyed the last chart/paragraph as well. Comparing the amortized cost of an EV @ 5-8 cents per mile to that of a $30K ICE over 5 years and 75,000 miles at 23.7 cents.

Those numbers are probably closer to 6 cents for EREVs like the Volt because you can easily get by on 70% before changing due to the extender.

The delta from 8-to-24 cents is whopping enough, but the 8 is most likely to drop to 4 cents in the next 5 years due to price reductions and technology advancements.

As for the V2G, it all depends on how often the power company wants to cycle my battery. If they could show a plan as well as providing good data on when the battery was accessed, with the right incentive, I might bite. For now, I think this one is better left to future battery chemistries.

Not a reply to this thread, just a comment. Edit button:

finecadmin said:

“Serious grid strain occurs in severe weather, a few times per year…

“Think of it as replacing emergency generators…”

Our local utility asked if we’d replace our home’s thermostat with a “smart” thermostat which, when air conditioner power demand is exceptionally high, the utility can set to raise our thermostat two degrees to alleviate the strain.

That sort of thing, or better yet using a similar system to defer intermittent high power demands from industry, would be a far better use for “smart grid” tech than wearing out a PEV’s battery pack.

Hey Pushmi-Pullyu,

warning: going off-topic :s

Which utility is that?

V2G is actually not what is interesting for the driver unless it means the grid is limited to your house in case of brownout or blackout. But what is interesting is off-peak charging and even more excess renewable production charging. In the first case you agree to charge off-peak to get a lower price for the electricity and in the second case you agree to buy at an even lower price since the utility is in excess and almost doesn’t know what to do with the energy coming from full power 14 h june sunlight or the strong wind high production. Those circumstances could mean half price and even lower. That is really what is interesting for the ev driver. Perhaps some power could be drawn in extreme peak demand situations for minutes durations but 40 cent is then a bargain for the utility as well because it passes the peak without having to buy any batteries. The excess green power is also interesting for the utility because otherwise he gets nothing for it or may even have to pay to get rid of the excess power in extreme circumstances.

Well, V2G Indeed. That is what could, backforming, be called Grid-To-Vehicle (G2V). Essentially, smart charging. That’s way more likely to happen than V2G, because it still has the benefit of being the simple sale of power to the customer and gives the utility what they really want: matching demand to generation.

No backforming necessary (now). It’s already called V1G, by analogy to V2G, and already in field trials.

This situation of utilities having to pay others to take their excess power has already happened in Texas on a few very windy days.

Away-from-Home Charging and V2G: Doomed or Killer App? Most of you know that many EV drivers are of the belief that higher-capacity EVs will remove nearly all need for charging away from home (except when your EV is with you and you are staying away from home, like on a road trip). If EV’s don’t need to plug in while the driver is at the office, then that battery is unavailable for the prime hours of V2G need. On the other hand, larger battery packs can receive and deliver more kWh and higher power rates without as much stress at the cell level. I would expect this to the battery amortization cost would have an inverse relationship to the pack size, but clearly this is not true at the current pricing of Model S packs. The relationship may not be correct until the Tesla Gigafactory brings cell costs down. However, as cell costs come down, the utility may find the capital costs and amortization costs will enable them to implement grid-scale battery storage using used packs from EVs or even new packs made for utility use. So, as battery acquisition costs fall, it makes V2G most cost effective, but it… Read more »

“I would expect this to the battery amortization cost would have an inverse relationship to the pack size, but clearly this is not true at the current pricing of Model S packs.”

The PIA study shows that inverse relationship between pack size and per-mile / per-kWh amortization cost.

However, it’s not clear to me where they got their pricing data for the Model S packs .. ie simply industry speculation or what.

You are right: the economics of V2G don’t make sense to the utility. As renewables increase it may be G2V (smart charging) that will be needed instead to make use of the daytime surplus.

Do they? Do you know what the going rates are for containerized backup generators, called in by utilities during heat waves? As V2G homes and vehicles are, by comparison, already in place, they have liquidity that’s worth money, and even higher dispatchability than Brayton generators, without the running cost of diesel.

Vehicles _move_.

Why have things that you can’t guarantee to be in place or to have significant power connection, when you can buy a cheap battery pack, with the power you want and put it where you want?

finecadmin asked:
October 31, 2015 at 5:00 pm

“Do you know what the going rates are for containerized backup generators, called in by utilities during heat waves?”

If they’re as expensive as you’re implying, then that is even more reason for the utility to buy and install its own grid storage system. That would be far more useful than emergency backup generators which are only available for use when rented; grid storage available 24/7 would pay the utility back by providing the capacity for everyday peak shaving and grid leveling.

Surely most of us EV drivers would be better off with V2H (Vehicle to Home) systems rather than V2G systems, I would rather store and use my own energy from the PV rather than selling it back to the grid for next to nothiing ?

V2G is a cancerous idea, similar to battery swapping and charging roads.

The batteries on well designed EV’s like the FORD Focus EV and EVen GM Volt don’t degrade with use. They should last at least 20 years. With V2G they can back up your home and also sell to the Utility during Peak hours. I’d say 10-20 Cents a kWh is plenty for a car sitting doing nothing with long life batteries.
The LEAF is not a good example. Read http://www.V2G-101.webs.com

jim stack said:

“The batteries on well designed EV’s like the FORD Focus EV and EVen GM Volt don’t degrade with use. They should last at least 20 years.”

This is ignoring reality pretty firmly. All rechargeable batteries degrade with use. Apparently the Volt’s battery pack was built to hide its degradation over time by reserving more of its capacity when new, not allowing full capacity use, then gradually relaxing that restriction as time passes, to compensate for degradation. So kudos to GM for designing a PEV battery pack so that the PEV doesn’t lose electric range over time. AT least not for the first few years; obviously there will be a limit to that, and no Volt is yet more than five years old.

But let’s not confuse hiding degradation with not having any degradation.

GM designed its pack for ordinary cycling, not the extra demands of V2G. With much of that, we’d certainly see Volt battery packs degrading noticeably over time.

I dunno about Ford, but certainly they don’t have any magic batteries which don’t degrade over time, any more than anyone else does.

PushMI-PullYU better check your facts. Do you own a Volt or FORD with cooled batteries? I have the FORD and in the real world have not lost even 1% capacity. We have also checked 12 other FORD Plugins including other FOCUS EV and the batteries are 100%.

I probably use batteries as part of my power backup system as much as anyone, in fact, I’ve got 2 “Powerwalls” worth of backup storage in my 2 GM products, should I need to do without the grid for a week at a time. I’d charge up the batteries at 900 watts a pop from my 2 solar inverters, and then use the juice from the cars during the nightime.

But V2G? They’ve been talking about this for years. Think of all the money ‘consultants’, and journalists have made talking about this.

Fuel costs are around 2-4 cents / kwh in most parts of the country. Owners won’t part with their juice without being paid 19-40 cents. Three guesses as to which option any utility with half a brain is going to use. Their main preparation is to make their baseload plants quickly ramp up and down their outputs without damage so as to follow the increasing mostly wind power fluxuations, and to a much lessor extent, solar.. Most Utility Sized Solar installations are mirrored-steam, and have high temp storage to ride them through the evening hours, let alone normal fluxuations during the day. So it will be a desperate utility that has to plead with its customers to give them back some of their juice. There are too many more direct and efficient ways of performing the same items. But then, I bet, since PG&E and SCE have been greatly successful in scamming their customers over the years ($7 Billion on the Smart Meter program alone for PG&E), I bet they are this minuite cooking up a way to bilk their customers out of more money, and saying they need EV’s to help out the “Smart Grid”.. As I’ve mentioned often,… Read more »

I think the next time British National Grid tries doubling their electric rates around here, they’ll take a page out of what Verizon (the local phone company) has always done.

Whenever their workers are on strike, Verizon would take out full page ads in the newspaper, and run tv ads saying “Name the Verizon Category of the day and get $25”.

Obviously the major cost of the contest was the ridiculous advertising cost. But the real purpose of the ‘contest’ was NO BAD PRESS for Verizon otherwise they’d pull their daily ads.

IF NG did this, then they could count on PLENTY of editorials saying its a matter of fairness that electric subscribers should pay double what they’re paying now.

“After all, NYC pays over 31 cents/kilowatt-hour, and California has their 4 tier, soon to be 2- tier system, and its UNFAIR that we have to pay so much less since WE SHOULD PAY OUR FAIR SHARE”.

I see a decentralized future where every home independently generates its own electricity with rooftop PV, every home has an energy storage device, and every home has an electric car- and the grid only exists as a means to trade excess energy as needed. I see V2G playing a minor role in this interconnected decentralized grid. Home based energy storage will be what is used primarily.

Well, not EVERY homes… PVs works well in California for instead, but not so much in NY. Then, you also forgot about all of those who live in condo or appartement.

Sure, we’ll have more house producing their own electricity, but it surely won’t be a large part of the electricity consume on the grid.

nobody thinking how great this could be at airports, free parking añd fully charged car when you come back, meanwhile the utility uses V2G while you are out of town and pays for parking!

Yet another example where Tom Saxon does not have any idea how batteries work, how smart grid operates and what is the overall economic structure of intelligent battery systems.

This is just sad, because the ignorance on new technology is currently the only barrier that is slowing down the development of energy infrastructure.

Basically the whole infrastructure need to be redisigned, because understanding what batterie can do for the grid, requires systeme level thinking,

Basically economics are as such that utility company invests about 15-20 % to the capital costs of EV battery. And for return Utility company can use about 15 to 20 % of battery capacity as it chooses while EV is plugged in. As average depth of discharge is very low, it means also that the cell degradation is negligible.

But this kind of smart system is difficult to implement, because it requires an advanved infrastructure and market systems to manage it.

Vehicle to grid isn’t really interesting until EVs come with significantly sized batteries. In a Nissan LEAF with 24 kWh, how much are you willing to spare? Probably not a whole lot or you risk getting stranded yourself. With a 124 kWh battery – sure, they can have half of it and that still leaves me with plenty for my own use.

today economic sweetspot for EV battery is around 70 to 90 kWh. This optimizes the battery longevity and value, such as fast charging ability. And also it is large enough battery that grid utility company could subsidize battery for about 15 to 20 % and use that 20 % capacity for grid balancing.

Today the levelized cost of 90 kWh battery + electricity is about the same as levelized cost of internal combustion engine + gasoline.

The Tom Saxton “study” strikes me as essentially a worst case scenario, so at most it puts a ceiling on what payment might need to be. As far as I can tell, Tom ignores some critical factors: (1) The declining cost of battery packs, which are likely to be a fraction of current costs when battery replacement would be necessary. This could likely shave 33-50% of the battery amortization cost based on the $300/kWh assumed. (2) What happens to the battery at end of vehicle life? What if the utility agreed to pay 50% of the cost of a new battery to take ownership of the original battery pack with 75% of original capacity for their own energy storage purposes? (3) How does intelligent management about what portion of the battery state of charge impact the battery degradation? Does using only 30-70% state of charge capacity allow for a noteworthy increase in battery lifetime? Seems like this is something the Chevy Volt battery already protects for. Why wouldn’t the V2G include a rate structure that is dependent on the battery state of charge? Lots of reason to suspect the 19-40 cents/kWh is a factor of 2 or more overstated. But… Read more »

I think it is easy to understand the theory how V2G can save money and improve efficiency.

I assume our utility (PG&E) will gladly keep the benefit to itself, and not pay the users a reasonable amount.

PG&E is a crazy company. We can choose a flat rate or time of day rate plan.

Clearly the TOD plan is a tool that can save a lot of money for PG&E, so you’d think they would price it to encourage it, but you would be wrong to think that.

During peak times, TOD rate during the day is up to 80% higher than the flat rate, and at night it is not low enough to compensate.

Why would you use your precious battery cycles for a few cents? Moreover, people will fear to be stuck in a car with an empty battery because they sold all of their electricity during the night.

No, V2G makes no sense to me. But what does make sense, is to keep your old battery pack after you replace it in your car, and plug it in your home to the grid. That’s much more logical.

I would go V2G for one reason: My own home’s power would be more stable. If I stabilize the local grid, that’s an added benefit.

I wouldn’t keep a car long enough to replace the battery. I would no more keep an old battery than an old engine. You’d need the subsystems (such as battery cooling/heating) for it to work.

The short cycles for grid stability probably wouldn’t affect the battery’s life at all. Any more than the short cycles to regen during braking.

It’s the long cycles (full discharge) that degrade the battery faster. Thus, nobody goes to full discharge. There is a lower and upper SOC maintained for just this reason.

V2G doesn’t make sense since the Grid will never pay for the owners what owners feel as “fair amount” to compensate for the wear and tear on their battery and cost of V2G equipment.

Now, Vehicle to home for backup power usage sounds like a very appealing feature that many PEV owners would love to have.