Advertisement

The Economic and Business Challenges to V2G

  • Lance NoelEmail author
  • Gerardo Zarazua de Rubens
  • Johannes Kester
  • Benjamin K. Sovacool
Chapter
Part of the Energy, Climate and the Environment book series (ECE)

Abstract

Building on the idea that the technical barriers of vehicle-to-grid form the basis of the other sociotechnical barriers, this chapter discusses how the technical elements of vehicle-to-grid impact its economic effectiveness. To do so, the chapter employs a cost-benefit perspective, building upon a comparison between an electric vehicle and a traditional gasoline car, later adding the costs and benefits of vehicle-to-grid. Next, recognizing the evolving nature of electricity markets, the future sources and magnitude of revenues are explored. Finally, while there are substantial economic benefits, the chapter then discusses how these costs and revenues can feasibly be translated into a viable business model. Challenges from a business model perspective include the pricing and revenue schemes, ownership structures, and the integration with other technologies.

References

  1. 1.
    Al-Alawi BM, Bradley TH. Total cost of ownership, payback, and consumer preference modeling of plug-in hybrid electric vehicles. Appl Energy. 2013;103:488–506.CrossRefGoogle Scholar
  2. 2.
    Mitropoulos LK, Prevedouros PD, Kopelias P. Total cost of ownership and externalities of conventional, hybrid and electric vehicle. Transp Res Procedia. 2017;24:267–74.CrossRefGoogle Scholar
  3. 3.
    Hagman J, Ritzén S, Stier JJ, Susilo Y. Total cost of ownership and its potential implications for battery electric vehicle diffusion. Res Transp Bus Manag. 2016;18:11–17.CrossRefGoogle Scholar
  4. 4.
    Wu G, Inderbitzin A, Bening C. Total cost of ownership of electric vehicles compared to conventional vehicles: a probabilistic analysis and projection across market segments. Energy Policy. 2015;80:196–214.CrossRefGoogle Scholar
  5. 5.
    Weldon P, Morrissey P, O’Mahony M. Long-term cost of ownership comparative analysis between electric vehicles and internal combustion engine vehicles. Sustain Cities Soc. 2018;39:578–91.CrossRefGoogle Scholar
  6. 6.
    IEA. Global EV Outlook 2018 [Internet]. Paris, France: OECD/IEA; 2018. p. 143. Available from: https://webstore.iea.org/download/direct/1045?filename=global_ev_outlook_2018.pdf.
  7. 7.
    Nykvist B, Nilsson M. Rapidly falling costs of battery packs for electric vehicles. Nat Clim Change. 2015;23(5):329.CrossRefGoogle Scholar
  8. 8.
    Noel L, Zarazua de Rubens G, Sovacool BK. Optimizing innovation, carbon and health in transport: assessing socially optimal electric mobility and vehicle-to-grid pathways in Denmark. Energy. 2018;153:628–37.CrossRefGoogle Scholar
  9. 9.
    Gough R, Dickerson C, Rowley P, Walsh C. Vehicle-to-grid feasibility: a techno-economic analysis of EV-based energy storage. Appl Energy. 2017;192:12–23.CrossRefGoogle Scholar
  10. 10.
    Noel L, McCormack R. A cost benefit analysis of a V2G-capable electric school bus compared to a traditional diesel school bus. Appl Energy. 2014;126:246–55.CrossRefGoogle Scholar
  11. 11.
    Wang D, Coignard J, Zeng T, Zhang C, Saxena S. Quantifying electric vehicle battery degradation from driving vs. vehicle-to-grid services. J Power Sources. 2016;332:193–203.CrossRefGoogle Scholar
  12. 12.
    Shinzaki S, Sadano H, Maruyama Y, Kempton W. Deployment of vehicle-to-grid technology and related issues. In: 2015 [cited 2018 Jul 21]. Available from: http://papers.sae.org/2015-01-0306/.
  13. 13.
    Lunz B, Yan Z, Gerschler JB, Sauer DU. Influence of plug-in hybrid electric vehicle charging strategies on charging and battery degradation costs. Energy Policy. 2012;46:511–19.CrossRefGoogle Scholar
  14. 14.
    Saxena S, Le Floch C, MacDonald J, Moura S. Quantifying EV battery end-of-life through analysis of travel needs with vehicle powertrain models. J Power Sources. 2015;282:265–76.CrossRefGoogle Scholar
  15. 15.
    EA Energy Analyses. Vehicle energy use and cost—methodology used in Grøn Transport Roadmap 2030 [Internet]. 2015 Nov. Available from: http://www.ea-energianalyse.dk/reports/1459_vehicle_energy_use_and_cost_methodology.pdf.
  16. 16.
    Pearre NS, Kempton W, Guensler RL, Elango VV. Electric vehicles: How much range is required for a day’s driving? Transp Res Part C: Emerg Technol. 2011;19(6):1171–184.CrossRefGoogle Scholar
  17. 17.
    PJM. Ancillary service market results [Internet]. Ancillary Services. 2018 [cited 2018 Jul 12]. Available from: http://www.pjm.com/markets-and-operations/ancillary-services.aspx.
  18. 18.
    Noori M, Zhao Y, Onat NC, Gardner S, Tatari O. Light-duty electric vehicles to improve the integrity of the electricity grid through vehicle-to-grid technology: analysis of regional net revenue and emissions savings. Appl Energy. 2016;168:146–58.CrossRefGoogle Scholar
  19. 19.
    Bhandari V, Sun K, Homans F. The profitability of vehicle to grid for system participants—a case study from the Electricity Reliability Council of Texas. Energy. 2018;153:278–86.CrossRefGoogle Scholar
  20. 20.
    Christensen B, Trahand M, Andersen PB, Olesen OJ, Thingvad A. Integration of new technology in the ancillary service markets [Internet]. Parker Project; 2018 Mar (Public Project Report). Available from: http://parker-project.com/.
  21. 21.
    Finnish Energy Industries. Energy Taxation in Europe, Japan and the United States [Internet]. Helsinki, Finland; 2010 Nov. p. 16. Available from: https://energia.fi/files/725/et_energiav_naytto_eng_040211.pdf.
  22. 22.
    Apostolaki-Iosifidou E, Codani P, Kempton W. Measurement of power loss during electric vehicle charging and discharging. Energy. 2017;127:730–42.Google Scholar
  23. 23.
    Zakeri B, Syri S. Electrical energy storage systems: a comparative life cycle cost analysis. Renew Sustain Energy Rev. 2015;42:569–96.Google Scholar
  24. 24.
    Allcott H, Wozny N. Gasoline prices, fuel economy, and the energy paradox. Rev Econ Stat. 2014;96(5):779–95.Google Scholar
  25. 25.
    Hausman JA. Individual discount rates and the purchase and utilization of energy-using durables. Bell J Econ. 1979;10(1):33.MathSciNetCrossRefGoogle Scholar
  26. 26.
    Noel L, Brodie JF, Kempton W, Archer CL, Budischak C. Cost minimization of generation, storage, and new loads, comparing costs with and without externalities. Appl Energy. 2017;189:110–21.CrossRefGoogle Scholar
  27. 27.
    Budischak C, Sewell D, Thomson H, Mach L, Veron DE, Kempton W. Cost-minimized combinations of wind power, solar power and electrochemical storage, powering the grid up to 99.9% of the time. J Power Sources. 2013;225:60–74.Google Scholar
  28. 28.
    Read S. Six in 10 customers are still confused over their energy bills [Internet]. Independent.co.uk. 2016 [cited 2018 Aug 18]. Available from: https://www.independent.co.uk/news/business/news/six-in-10-customers-are-still-confused-over-their-energy-bills-a6972811.html.
  29. 29.
    University of Delaware. The grid integrated vehicle with the vehicle to grid technology [Internet]. 2016 [cited 2018 Aug 18]. Available from: http://www1.udel.edu/V2G/.
  30. 30.
    Ovo Energy. Vehicle to grid: your electric car as a power station [Internet]. 2017 [cited 2018 Aug 18]. Available from: https://www.ovoenergy.com/guides/electric-cars/vehicle-to-grid-technology.html.
  31. 31.
    Prateek R. A V2G-repository: 18 European vehicle2grid-projects. 2018;18.Google Scholar
  32. 32.
    Casey J. Consortium: vehicle-to-grid charging ‘could generate £5 billion’ [Internet]. Road Traffic Technology. 2018 [cited 2018 Aug 18]. Available from: https://www.roadtraffic-technology.com/news/consortium-vehicle-grid-charging-generate-5-billion/.
  33. 33.
    Beeton D, Meyer G. Electric vehicle business models. 2014. 266 p.Google Scholar
  34. 34.
    Sovacool BK, Axsen J, Kempton W. Tempering the promise of electric mobility? A sociotechnical review and research agenda for vehicle-grid integration (VGI) and vehicle-to-grid (V2G). Annu Rev Environ Resour [Internet]. 2017 [cited 2017 Aug 24]. Available from: http://www.annualreviews.org/doi/abs/10.1146/annurev-environ-030117-020220.
  35. 35.
    Yamagata Y, Seya H, Kuroda S. Energy resilient smart community: sharing green electricity using V2C technology. Energy Procedia. 2014;61:84–87.CrossRefGoogle Scholar
  36. 36.
    Tanguy K, Dubois MR, Lopez KL, Gagné C. Optimization model and economic assessment of collaborative charging using vehicle-to-building. Sustain Cities Soc. 2016;26:496–506.CrossRefGoogle Scholar
  37. 37.
    Andersen PB, Hashemi S, Sousa T, Soerensen TM, Noel L, Christiensen B. Cross-brand validation of grid services using V2G-enabled in the Parker Project. In: Kobe, Japan; 2018.Google Scholar
  38. 38.
    Sovacool BK, Noel L, Axsen J, Kempton W. The neglected social dimensions to a vehicle-to-grid (V2G) transition: a critical and systematic review. Environ Res Lett. 2018;13(1).CrossRefGoogle Scholar
  39. 39.
    Arena A. Amsterdam Arena more energy efficient with battery storage [Internet]. 2017 [cited 2018 Aug 18]. Available from: https://www.johancruijffarena.nl/default-showon-page/amsterdam-arena-more-energy-efficient-with-battery-storage-.htm.

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Lance Noel
    • 1
    Email author
  • Gerardo Zarazua de Rubens
    • 1
  • Johannes Kester
    • 1
  • Benjamin K. Sovacool
    • 1
    • 2
    • 3
  1. 1.Department of Business and TechnologyAarhus UniversityHerningDenmark
  2. 2.Science Policy Research Unit (SPRU)University of Sussex UnitFalmerUK
  3. 3.Universiti Tenaga NasionalKajangMalaysia

Personalised recommendations