The battery EVs (BEVs) market is booming globally. This upsurge enables not only largely more sustainable mobility options, but also new ways to transform the energy market. These “batteries on wheels” can turn into virtual power plants, generating electricity to support the grid (vehicle to grid or V2G) as well as to power homes (vehicle to home or V2H) or a craftsman’s tools (vehicle to load or V2L). BEVs thus potentially provide more resilient access to electricity while creating new revenue streams.
In 2022, 7.7 million BEVs were sold globally, a number expected to exceed 10 million in 2023 or close to a 14% share of the light vehicle market. At the end of 2022, the global BEV installed base reached 18 million units — including 10.7 in China, 4.4 in Europe and 2.1 in the USA — and will increase to 28 million by year end. This may represent just over 2% of the market by the end 2023 but the ratio is growing fast and expected to reach about 18% by 2030 (according to BloombergNEF).
The batteries fitted on existing BEVs represent an energy capacity of roughly 1 TWh. By comparison, residential electricity consumption amounts to about 25 kWh per household per day in the USA. If we could use a third of BEVs’ total battery capacity (e.g., cycle a battery’s state of charge between 50% and 80%) each day, we could power roughly 15 million homes currently. Better yet, we could alleviate black outs which are far from uncommon in the USA.
It is clear that renewable energy, which plays a central role in greening electricity generation, is far from offering an ideal match for our energy demand. This is especially the case for photovoltaic. The so-called “duck curve” (below, California in April 2021) shows the discrepancies between supply and demand during the 24 hours of a day. Between 1 and 3pm, net demand is at its lowest whereas it reaches its peak between 7 pm and midnight.
Tapping EV batteries offers a significant CO2 benefit during periods of peak net demand. EVs are typically parked at a time when photovoltaic panels are inoperative — the sun is down! Utilities typically address this peak energy demand by turning on CO2-generating gas-fueled power stations. EVs can provide energy instead of these power stations, then recharge during the period of lowest energy demand, i.e., between midnight to 6 am, and be ready for one’s daily drive.
Here is more proof that this solution is addressing a real issue. In Northeastern USA, Vermont’s utility operator recently asked state regulators to allow it buy batteries it will install at customers’ homes in order to alleviate power outages. The reason is simple: this is an economical alternative to upgrading the grid. EV’s battery pack can also certainly fulfill part of that role, especially as this energy capacity is increasingly available anyway.
OEMs Show Interest In Playing a Key Role
In 2015, BMW and San Francisco Bay Area’s electric utility, Pacific Gas & Electric (PG&E), started a joint project to assess the potential benefit of optimizing the times when EVs charge based on grid load and the price per kWh. Vehicle owners were paid to adapt their charging patterns. Energy equivalent to 19MWh was shifted over one year and the grid load was reduced by up to 100 MW. Last May, the collaboration was extended to 2026. According the news release “BMW will develop a test fleet of EVs that will be used in day-to-day operations and serve as a grid resource to help integrate renewable energy and balance the grid.”
In a similar fashion, Ford and PG&E announced a joint project in 2022 to assess the potential use of bi-directional power technology on its Lightening pickup to provide users up to 10 days of power to their homes during an outage. Given the relatively poor reliability of the power grid in the USA, this message will resonate with most homeowners. Last year still, GM also initiated a project with PG&E to explore the potential of bi-directional charging. Why PG&E again you may ask? That is because about 20% of all battery EVs sold in the USA are in the SF Bay Area.
Several major OEMs are now expressing a strong interest in leveraging the large energy capacity associated with their EV fleet to generate new value streams. Last month, BMW, Ford, and Honda announced the creation of ChargeScape, a company focusing on V2G. It will establish a platform to seamlessly connect electric utilities, OEMs and EV customers to manage energy usage. It will enable EV customers to earn financial benefits through a variety of managed charging and energy-sharing services. Operations are expected to start in the USA and Canada in 2024.
How about Tesla? The EV leader has produced over 5 million vehicles since 2012, most of which are still operating. This equates to approximately 350 GWh. Tesla is in the best position to lead the way, especially as I understand its power electronics is capable of bi-directional energy transfer. However, the EV leader will likely hold on to enabling this feature until there is a strong business case since it will cannibalize their Powerwall business (over 500.000installed to date).
Enabling Bi-Directional Energy Transfer
Bi-directional energy transfer has been available with the Japanese OEM-specific CHAdeMO standard, i.e., Nissan, Mitsubishi vehicles, since day one. This feature has been introduced on CCS-equipped vehicles over the past couple of years. Today, they include Ford Lightening pick-up, some Hyundai models and VW’s ID.Buzz. Recently, GM announced it will deploy bi-directional energy transfer capability across its EVs offering with model year 2026.
All OEMs will eventually offer this feature. Let’s keep in mind that EVs can offer very significant energy capacity, in particular in the USA. For instance, battery options go up to 224 kWh on GM’s Hummer EV (and soon Silverado) and 180 kWh on Rivian’s R1T and R1S. EV energy capacities tend to be smaller in Europe and China where vehicles and lighter and buyers are satisfied with shorter ranges. Nevertheless, all EV offer some power generation potential.
In order to maximize the benefit of our “batteries on wheels”, vehicle users will need to ensure their cars are connected as often as possible and accept a marginal risk on their vehicles’ state of charge. The former point can be addressed with automatic charging, i.e., the EV connects itself to the grid at home (or the office). For instance, French startup Gulplug offers a conductive, hands-free charging solution that does just that.
Talking about chargers, Nissan and Fermata Energy announced in 2022 that the OEM approved the latter’s bidirectional charger for the Nissan Leaf in the USA. It is important to note that Nissan says its use will not impact the Leaf’s battery warranty. Other companies offer V2H/V2G capable home chargers such as Wallbox or Kaluza.
The Above Does not Come Without Challenges
How fast and how well will utilities evolve to enable the options features here? Operating models and business models must be adapted beyond what has been done in dealing with energy generated by roof-top photovoltaic panels — e.g., net metering. EVs will bring a different scale and much more flexibility than solar. They will also demand a fine management of the charge / discharge cycle, including the understanding of each EVs’ predictive usage to avoid trapping its user with an insufficiently charged battery when the EV is need.
What will be the long-term impact batteries of cycling batteries for the purpose of generating energy? Who will take responsibility for potentially accelerated loss of net capacity, thus value? I suspect slow charging / discharging (e.g., 7 kW) and shallow cycles (e.g., between 30 and 70% capacity for Li-Ion batteries) would alleviate this risk. Also, OEMs will take this potential liability for leased vehicles that will generate revenue for themselves and their users. Nissan’s commitment to stick with its warranty as stated above is promising since the OEM has 12 years of experience selling BEVs.
I am convinced that these challenges will be met with proper solutions over time and that BEVs will eventually play a key role in the energy space.
by Marc Amblard, Managing Director of Orsay Consulting – Based in Silicon Valley