Vehicle to Grid (V2G): A Key to Smart Energy Management

Posted By Driivz Team

August 6, 2020

The exponential growth of electric vehicles requires that EV charging demands be balanced with existing grid supply limits to minimize strain on the power infrastructure. One of the more promising solutions to meet this challenge is vehicle-to-grid (V2G) charging.

Vehicle-to-Grid (V2G) is key to the future of smart energy management, allowing EVs to green the grid by stabilizing demand and smoothing peaks and troughs throughout the day.

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Most vehicles remain stationary more than 95 percent of the time, so V2G leverages that inactivity, enabling a two-way energy exchange between vehicle and grid. The energy from the EV batteries is available to the electric grid to serve peak needs, with the vehicles recharging during non-peak hours. Using EVs as decentralized electric storage resources minimizes the need for capital investments in the grid to support ever-increasing demand, while lowering operating costs.

According to ABI Research, “By 2025, V2G could provide additional revenues and cost savings of US$2 billion to global energy suppliers and offer consumers 15% savings on the household energy bill.” 

 V2G and the Energy Landscape

V2G creates further flexibility within the overall grid, providing alternative energy sources for a range of applications.

While many energy companies are increasing their usage of renewable energy, such as solar and wind, those sources cannot consistently produce power 24/7 due to weather. The gaps can be supplemented with V2G-transmitted power, in which EVs can charge using solar or wind power during the day and return the excess energy to the grid during the evening peak hours.

Furthermore, V2X may not necessarily be used to “feed” the larger grid itself but rather direct energy usage to specific requirements. Fleets may be primary contributors to V2X operations. Therefore, in an office complex, parked company vehicles may supply the facility’s electricity requirements, eliminating the need for grid-based power resources.

The Challenges of V2G

Adoption of V2G is still in its nascent stages due to various challenges: battery technology, lack of business models, commercial feasibility, and regulatory issues.

Battery efficiency and durability are two of the critical factors affecting V2G adoption. The more power the battery can store while maintaining maximum capacity, the more efficient V2G will be – but battery technology isn’t there yet. Addressing these issues requires the support of manufacturers to both design and commercialize the batteries. Also, it’s not known how V2G will affect battery life. Electric vehicle manufacturers will have to find a way to include V2G capability without compromising existing and future battery warranties.

One-direction EV charging business models are well developed. Consumers pay based on time attached to the charger, kilowatt-hour, and peak/non-peak charging and get discounts based on frequency of charging, customer loyalty programs, etc. Two-way business models need to be developed – driver compensation, discounts on energy, replacement batteries, etc. – to demonstrate a value proposition which distributes benefits and risk.

Commercial feasibility needs to be addressed, as well. Is it worth it to the energy companies or the e-mobility service providers to implement V2G systems? How much investment is required to create the infrastructure to support the consumer-facing hardware and developing and implementing the software for tracking, billing, and refunding two-way charging?

Going Standard

While the consensus is that V2G is going to be widely adopted, not every player in the market is on board with the concept. That’s why industry standards are critical. Processes, procedures, and technologies to manage the grid’s bidirectional flow must be established.

New distribution standards for congestion management and voltage regulation need to be developed to ensure universal compatibility of V2G within existing infrastructure. In order for an EV charging management system to be V2G ready, it needs to comply with ISO15118, which is an international standard defining the V2G communication interface for bidirectional charging and discharging of electric vehicles.

The Regulatory and Market Environment

Power companies are usually publicly regulated. V2G is a completely new area, lacking any sort of regulatory infrastructure or oversight. The utility industry needs to be proactive in approaching lawmakers to create the regulatory infrastructure necessary for adoption. Energy tariffs need to be rethought out to reflect the real-time value of energy and capacity in the power system.

While the electric vehicle industry is familiar with the term V2G, the average consumer is not. Automakers, utilities, and emobility service providers need to work together to create awareness campaigns to inform consumers of the possibilities of V2G to drive pull demand.

V2G & the Future

V2G extends the promise of electric vehicles, both environmentally and commercially. It reduces the carbon footprint and creates a cleaner environment. With V2G, the emobility services industry can create new ways to generate revenue, reduce infrastructure investment, and lower TCO. It’s just a matter of time before V2G becomes a reality.


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