How to jump-start the vehicle-based smart grid

How to jump-start the vehicle-based smart grid

Editor's note: To learn more about the potential for vehicle-to-grid technology, be sure to check out VERGE@Greenbuild, coming this fall to San Francisco, November 12-13, 2012.

The triple tragedy that struck Japan in March 2011 is already remaking global energy markets. In the wake of earthquake, tsunami and nuclear disaster, public outrage over the meltdown delayed or derailed nuclear energy’s promised renaissance in many markets.

Yet if Japan’s tragedy hastened the demise of one energy technology, it may have jumpstarted another. In the year since, as Japan struggled to cope with crippling shortages of electric capacity, a handful of automakers have brought to market appliances that convert electric vehicle batteries into systems that can provide backup power to homes and help support the teetering grid.

In April, Mitsubishi Motors unveiled a portable adaptor, the MiEV power Box. For roughly $1,800, the appliance lets owners of MiEV electric cars plug in, and draw up to 1.5 kilowatts. A month later, Nissan followed suit with its Leaf to Home, a $7,000 device that, drawing power from a Leaf EV, can power a typical Japanese home for up to two days. Toyota too is demonstrating a similar system linked to its plug-in Prius hybrid in 10 homes and plans to launch a commercial version next year, if all goes well.

For the thousands of Americans suffering through power problems this summer—due to a punishing heat wave and storms in the mid-Atlantic—the appeal of these technologies is surely tantalizing. The case for EVs would sure seem more compelling if consumers knew the Chevy Volt or Nissan Leaf in their garage could also power their homes during an outage.

In fact, vehicle to grid, or V2G, has emerged as a sort of holy green grail. All manner of energy gurus -- from Google.org to Rocky Mountain Institute-founder Amory Lovins to the DOE to Wired magazine -- have recognized V2G as a grand solution to many of the problems that bedevil our grid and transportation fleet.

The promised benefits go well beyond household backup. As consumers buy more EVs, the combined stock of batteries offers utilities a low-cost path to grid-scale storage—why pay for grid batteries, if utilities can “borrow” EVs to perform the same trick? In turn, cheaper storage capacity paves the way for more solar panels and windmills by making it easier to store their notoriously variable output. And since utilities today pay for the sorts of storage services EVs might deliver, V2G systems could earn cash payments for EV owners, thereby lowering the cost of EVs and boosting their sales.

Yet despite Japan’s new systems, a comprehensive V2G solution remains years off. “[They are] a good first step, but they essentially turn the car into an expensive backup generator. There’s still a big leap to V2G,” says Ted Hesser, Energy Smart Technologies analyst at Bloomberg New Energy Finance.

In Japan, those new systems can support the grid indirectly, by feeding power back to the households and reducing their pull from the grid. But for now, they cannot link to the grid: by regulation, they’re strictly vehicle-to-home, or V2H, Ali Izadinajafabadi, a Tokyo-based analyst for Bloomberg New Energy Finance wrote in an email.

To make the leap from V2H to V2G will require navigating a thicket of barriers, including funding investment needs, upgrades to grid software, and creating cooperation between industry players who, so far, haven’t been eager to play.

The first of these barriers is a simple lack of standardization for two-way EV connections. It took big automakers years to agree on technical standards on how one-way charging plugs would be built. The effort didn’t account for two-way flow of power. Already dogged by high-costs and reliability concerns over EVs, carmakers are wary of imperiling warranty terms, or adding to the material and engineering costs to create two-way plugs that might not ever be used.

“It’s not that it can’t be done,” says Mark Duvall, Director of Transportation Research at EPRI, the utility industry’s policy research arm. “The automakers, utilities and the others involved have had a lot of other challenges to solve first.”

The Japan solution, Duvall explains, cleverly works around this barrier by offloading the technology necessary to manage the power flow out of the car into a standalone device. Both the Nissan and Mitsubishi systems tap into the EV batteries through high-power, 440-volt direct-current connections, which remain rare in the U.S.

Then there’s the closely related problem of the lack of a smart grid. For V2G networks to deliver grid-scale benefits, they will have to be connected into advanced systems able to communicate to vast numbers of EVs, in real time, to orchestrate hundreds of small power sources so that they behave as a single sizeable resource that can be tapped by grid mangers such as PJM. Those systems are taking shape, “But they’re not there yet,” says Bloomberg’s Hesser.

Another scale problem: there aren’t yet enough EVs on the market to make big V2G plays of interest to utilities. Sales have been steady, but slow. Pike Research recently postponed until 2018 the year in which it projects EVs will hit 1 million in the U.S. Until they reach a critical number, they’re too thinly dispersed, and too few in number to provide megawatt-scale storage and other power services that interest utilities, adds Hesser.

Lastly, however appealing they look on paper, the economics of V2G networks remain less than compelling for EV owners, especially if early systems run as high as Nissan’s $7,000 unit in Japan.

Last year, NRG Energy unveiled a pilot program called eV2g. Targeting commercial fleets, the company estimates that each vehicle would net $440 per year, Erica Gies writes in Forbes.com.

A 2010 study by CMU looked at consumer (not fleet) V2G. The researchers used market information on the value of the sorts of near-, medium-, and long-term energy storage services V2G networks could provide and estimated the total annual value for an individual EV owner at not more than $250.

These guesses also underestimate the costs utilities face to market these programs as well. “You have to convince consumers to adopt this very new way of owning a vehicle,” says Hesser. As we’ve seen with EVs, “That takes a massive amount of marketing and education.”

What then will it take to get V2G off the ground here? Progress will continue, to be sure. Writing in the New York Times Wheels blog, green car guru Jim Motavalli reports that Nissan and Mitsubishi are both evaluating the option of adapting their V2H systems to the U.S. Meanwhile, pilot scale V2G efforts, run by the DOE, NRG and others are ongoing -- but they involve only tens or hundreds of vehicles.

Such projects won’t get to commercial scale anytime soon. For V2G to link up millions of vehicles, and fulfill its green promise, Hesser believes the industry will have to push the technology, rather than wait for consumers to pull it. “For V2G to work, it means lining up the interests of vehicle owners, carmakers, smart grid players,” he says. “There’s just too many players for this to happen anytime soon on its own.”

He likens the challenge to the conundrum facing energy-efficient appliances. In that market, the value of energy savings were too low, or spread out, to motivate consumers. So the DOE stepped in to establish efficiency and technology standards that have delivered huge aggregate energy savings. 

Specialized commercial fleets also show early V2G promise. An MIT study cited by CleanTechnica.com suggests that fleets may offer a sweeter spot for V2G deployments, at least early on. Trucks or buses, after all, require bigger battery packs. And because they park in the same area, they offer big battery capacity in a single location, making them easier to orchestrate. The study estimates earnings potential of up to $1,700 per truck.

Very high prices for energy could jump start V2G, too. Consider Nuvve -- to date, the leading commercial scale V2G effort in the world. Started in 2011, the company is based in Denmark where, importantly, electricity rates are roughly four times higher than in the U.S. Plus, a third of electric power comes from variable renewable sources such as wind, so storage services are paid at a high rate.

Based on business plans mapped out by Zachary Shahan at CleanTechnica.com, EV owners in Nuvve’s network will be able to rake in up to $10,000 from V2G services over a vehicle’s lifetime.Finally, there’s the hard-to-price appeal of backup for blackouts. The U.S., luckily, hasn’t faced power problems as dire as Japan’s. But if blackouts multiply, necessity may spur V2G invention here too.