Policymakers are eager to use V2G to help bring more renewable energy into the system. The Swiss parliament has already made a decision that V2G operators won’t have to pay the full network fee when charging their batteries. Specifically, the energy that is stored and then sent back to the grid is exempt from this network fee. However, the exact implementation of this network rate exemption is currently in the consultation process. In this blog post, we analyse and discuss different implementations of this network rate exemption.
Policymakers should address V2G’s lack of profitability
Considering the potential of and the political support for V2G, why is this technology not being widely adopted? The reason is that it simply isn’t profitable. Firstly, V2G technology is very expensive, particularly the bidirectional charging stations, and secondly, only meager revenues, if any, are currently possible with V2G.
We analyzed how policy makers can make V2G profitable in order to integrate renewable electricity using car batteries. To answer this question, we assessed how the profit-oriented charging behavior of bidirectional cars reacts to a given time-of-use tariff for electricity. For this purpose, we used a linear-optimization model which uses the results from two other models (i.e. an agent-based model of electric vehicles and a Swiss electricity system model). Our results suggest three key recommendations for policymakers.
First, the recently approved network rate exemption is not enough to make Vehicle-to-Grid (V2G) technology profitable, regardless of the exact implementation of the network-rate exemption. Regarding the declining costs of bidirectional charging stations abroad, V2G could become profitable in the future. In Switzerland, the only available bidirectional charging station costs around 11’000.- CHF. However, similar products are now available in North America for around 4’000.- USD which leads to the assumption that future prices in Switzerland might fall as well. To support V2G now, policy makers could either subsidize V2G charging stations, as for example done in the Canton of Zurich, or increase the price spread between the high and the low electricity tariff. The latter does increase the potential for arbitrage since energy can be purchased at lower and sold at higher prices.
Second, policy makers should inform the population about how little battery degradation caused by V2G weighs against the other costs and revenues involved. A concern frequently raised regarding V2G is battery degradation. In contrast, our results suggest that battery degradation is only a very small cost component when doing V2G in cases with good V2G revenues, i.e. less than 2% of the total costs. Recent research has found that battery degradation is more a perceived fear of car owners rather than a technical challenge today.
Third, policymakers should not only increase the price difference between time-of-use tariffs but also adjust when low tariffs are available. Currently, many tariffs are high during the day and low at night, encouraging car charging at night and discharging during the day (see Figure 2, blue lines). However, with more solar energy, we need cars to charge when the sun is shining around noon and discharge that energy at night (see Figure 2, orange line). By shifting the low tariff period to midday, we can better integrate renewable electricity – some utilities in Switzerland already did that, for example the eniwa or EWS. We analysed a bidirectional charging station at a workplace under the current EV-tariff of EWZ and a new PV tariff. Our results indicate that one bidirectional charging station can help to integrate as much as 2 MWh of renewable electricity in 2050. This is enough to fulfill the energy demand of one person at home for about one year. This energy could otherwise not be taken up by the grid, either because the electricity in the grid cannot be transported from producer to consumer or because there is simply not enough demand for all the produced electricity. In these situations, the surplus of electricity is “wasted”, also called curtailed.
