Increasing EV deployment represents an exciting development in human transportation, as well as playing a vital role in reducing GHG emissions. The number of EVs on the roads is growing, a trend that will continue as the technology becomes better and cheaper.
Many businesses already recognise the need to adapt, as both customers and employees begin to use EVs. Businesses of all shapes and sizes thus must take into account the effect of EV charging and EV uptake when considering their energy strategy. Deploying multiple charge points, or charge points with DC rapid charging capabilities, requires significant amounts of electricity, which can lead to increased costs and even necessitate upgrades to the supply.
Electric vehicle supply equipment (EVSE) has improved greatly in recent years, with increasing power meaning substantially decreased charging times. However, with a single rapid charger now requiring anywhere between 45kWh and 300kWh, this can put tremendous strain on small and medium sized businesses, who typically only use between 5,000kWh to 50,000kWh a year in total. Deploying rapid EVSE could in some cases require capacity improvements up to 30 times greater than the existing supply, at substantial expense.
While many smaller businesses are capable of providing chargers of around 3kWh to 7kWh each, many are seeing the need to upgrade to faster charging. Furthermore, while a slower charger will have less effect on electricity consumption than a fast charger, their slower charging times often necessitate a large number of charge points, which will have a significant effect on electricity consumption. For example, a single 3kW EVSE charging for 8 hours will use 24kWh, which works out at approximately £3 per day. While most businesses would be more than happy to accommodate such a cost for a single employee, if a hundred or more are charging their EVs everyday, this could result in a less palatable electricity bill, particularly when combined with the initial installation costs. Even if there are only 25 employees charging everyday, that still results in an electricity bill of over £25,000 a year, compared to average annual SME electricity costs of £1,000 to £5,000 a year.
Despite this, the accelerating demand for EVs means that most businesses will feel the need to accommodate EV drivers and provide EVSE as a basic service, in a similar way to how most businesses now offer wifi. However, it is essential that each business carefully decides the power of each charge point and how many charge points are offered, given the significant costs that can be incurred. Such planning is important if one is to assess the impact on the energy supply, the expense, and also what potential incentives/rebates/schemes can be used to reduce the overall cost. Businesses who adapt to the EV transition quicker will likely enjoy a competitive advantage in attracting a rapidly growing customer base, as well the potential for additional forms of revenue in applying their own margins to charging services, or through employing Vehicle-to-Grid (V2G) systems.
The overall electricity system will certainly feel the effects of widespread deployment of charging networks, from generation to transmission to distribution, with EVs being the most significant addition to the electric load since the rise of air conditioning in the 1950s. There are concerns that many national grids will be unable to cope with the strain such charging infrastructure will incur, creating a myriad of issues including increased energy usage (and thus increased emissions), and the potential for overloading and blackouts. Smart charging appears to be one of the main answers to this concern. Smart chargers control charging times and speeds, charging at times of low demand and spreading the load in accordance with the needs of the grid. It considers demand, cost, time of day as well as consumer preferences to charge at the optimum time and rate. Those who are willing to employ smart chargers will see considerable savings in the cost of charging, whereas those who wish to charge their EVs immediately will still be able to have that option, though at a greater price.
The most notable (and effective) use of smart charging so far is a network called JuiceNet launched by Enelx. By controlling JuiceBox chargers (the related hardware) through the company’s cloud-connected JuiceNet software, and signing up EV drivers to take part in rewards programs, it delivers beneficial grid services such as demand response capacity (up and down) on a daily basis. This network of connected devices is able to delay charging schedules based on the preferences of the grid, whilst also enabling EV drivers to opt out if inconvenient at a particular time. EV owners are compensated for their services to the grid, with rewards growing as uptake of the service increases, as well as offering rebates for new charging stations. Essentially this gives grid providers control and access to a massive storage capacity which they can pay EV drivers to use for grid balancing services with the permission of the customer. This applies the idea of a shared economy to the electricity network, and provides ample benefits to EV users, whilst making the EV transition a blessing in disguise for utility providers and the grid, as opposed to a looming challenge as some predicted.
Vehicle-to-grid (V2G) technology allows EV batteries to store energy and discharge it back to the electricity network when it’s most needed – for instance at peak times of the day when usage is at its highest. This allows utilities to balance loads by “valley filling” (charging at night when demand is low) and “peak shaving” (sending power back to the grid when demand is high). The batteries in EVs are ideal to provide such balancing, providing power is able to flow in either direction. The ever increasing network of EVs is actually able to act as an enormous mobile battery, storing vast quantities of electricity, withdrawing and releasing energy back into the grid when necessary. Consequently, a large EV fleet is actually of significant benefit when combined with V2G systems as a balancing resource. While the increasing amount of renewables in the national energy mix is highly encouraging in many ways, one disadvantage is the inability of renewable resources to alter output in order to meet demand, unlike fossil fuel power stations. The new and growing green decentralised energy mix is much harder to balance, and thus V2G and smart charging can be highly valuable tools in the wider renewable transition.
V2G also uniquely reduces the cost of running an organisation’s EVSE by generating revenues through grid balancing and participation in local energy markets. Small amounts of the energy stored in each connected EV battery can be “sold back” to suppliers in order to help with fluctuating supply and demand. This could be through either direct compensation or possibly access to preferential rates. While there are some promising benefits to V2G and smart charging systems, there are still some challenges that need to be addressed, particularly given the fact there are multiple charging locations with differing levels of demand and suppliers. This raises the dilemma of how such associated benefits are allocated. To achieve a functional and fairly allocated V2G smart charging system, it is essential that digitally automated systems are in place in order to carry out data and financial analysis in real-time, which takes into account the multitude of parameters which relate to electricity price. It is also important that the entire process is transparent and can be simplified so as to be clearly understood by the EV user. This could be done through the use of a user friendly app, that helps an EV user drive and charge when they want, and how far they want for the lowest possible costs.
There are currently two main revenue streams provided by V2G and selling electricity back to the grid. The first is known as firm frequency regulation (FFR), which involves the overall balancing of the system, and is the more lucrative of the two potential income streams. This currently can earn a user approximately 50p for every kWh sold to the grid. The second source of income is through arbitrage, which is based on buying electricity from the grid at lower prices and selling it back when price increases, in a more market-based energy trading practice. Currently this generates around 3.8p per kWh, which in perspective would require the user to discharge the equivalent energy of 12,500km of driving into the grid to earn over £100.
A recent trial in Denmark saw a fleet of ten Nissan electric vans perform over 100 hours of V2G over a period over 2 years, selling over 130,000kWh of electricity back to the grid. In doing this, each van made over €1,860 (£1,600) per year. If such practices were scaled up for a business that employs a large fleet of such vehicles, vast revenue streams could be unlocked. However, the cost benefits of such widespread deployment by a fleet operator are far more apparent than for individual early adopters, who may see initial installation costs, which are currently considerably higher than for normal EVSE, as being less financially viable. Furthermore, its benefits to the grid are likely only seen when adopted by a large fleet operator, which ensures a large number of vehicles (and thus a large offsetting capacity) as well as much more regular charging times, as opposed to an individual user where this is not the case. Another issue is that as V2G use increases, its benefits could decrease due to diminishing marginal utility and the rewards being spread wider and thinner among more users.
One major concern about the implementation of V2G, is the effect it could have on the battery of an EV. There have been contradictory reports on the effect of V2G and battery degradation, with some of the more detrimental studies claiming that it potentially shortens battery lifetimes to less than five years and increases their capacity loss by 75% over an 18-month period. Proponents of V2G such as Nissan argue however that the everyday charging and discharging (through driving) are the cause of battery degradation rather than V2G. While this is all currently being fiercely debated, ‘optimised’ or ‘smart’ V2G systems have been offered as a solution. These operate more responsively and efficiently, and to rely on prognostic battery degradation models to limit the amount of energy that could be traded. This could increase earnings from V2G, as well as potentially extending battery life even beyond the case in which there is no V2G.
Another issue is the lack of standardisation, as currently only CHAdeMo DC connectors are capable of providing V2G, limiting the amount of vehicles that can use the technology. The fact that CCS connectors, which dominate in Europe, cannot use V2G also severely reduces its viability in many of the nations where EV use is most prevalent, making the market for such technology small. Tesla however, in a remarkable u-turn, have given their new Model 3 bidirectional charging capabilities. Furthermore, the inverter needed for V2G is onboard the vehicle itself, meaning previously installed home chargers could potentially be given V2G (and vehicle-to-home) capabilities after a software update, considerably cheaper than installing a new charger with V2G like the Wallbox Quasar which is needed for the Nissan Leaf. The popularity of the Model 3 also means Tesla’s fleet has a theoretical 10GW demand offsetting capacity, an amount that utility companies would be very keen to have access to. Tesla’s million mile battery plans may also help ease concerns about battery degradation.
The use of battery storage sites, or ‘behind-the-meter’ battery storage has been seen as another possible solution to help the grid cope with growing EV usage. Combining battery storage systems with EVSE allows energy to be stored, trickling charge from the grid at a lower rate during off-peak times, as well as providing high levels of charge without causing any strain to the grid whatsoever. Furthermore, such energy storage systems could be paired with renewable technologies such as solar panels, making EVSE either partially or entirely off-grid, and potentially completely GHG free. It is estimated that the use of energy storage could decrease demand charges by up to 73%. This is significant given demand charges can make up to 90% of the monthly electricity bill of an EV station. Such savings could be passed on to the customer resulting in a significant competitive advantage. In addition,there has been a significant fall in the price of lithium-ion battery storage, from $1200/kWh in 2010, to around $176/kWh. While there may be short-term fluctuations, Bloomberg expects further decreases in battery prices, falling from $176/kWh at the pack level today to $87/kWh in 2025 and $62/kWh in 2030.
There has been some argument as to whether widespread usage of V2G systems would make behind the meter systems redundant, as the storage systems needed for V2G (the actual EV battery), already exist as part of the EV and are simply being repurposed. This means there are none of the upfront costs incurred during behind-the-meter battery installation. Furthermore, while a small percentage of one EV battery may make a negligible difference in sharing its electricity with the grid, only a small proportion of the predicted number of EVs would need to use V2G technology to represent an enormous dynamic energy storage system that can be used to balance the needs of the grid. Behind-the-meter storage has not been widely deployed, and it could be a long time before its capacity reaches anywhere near the capacity of a nationwide EV fleet using V2G.
While the widespread deployment of EVSE with V2G capabilities is certainly easier than installing behind-the-meter storage systems, those with the ability to install storage systems would reap significant rewards. Those who employ behind-the-meter storage unburden the customer from any issues that come with charging directly with the grid, acting as a buffer. A customer will not need an app nor even be aware of demand curves and the needs of the grid as a local battery storage system will be able to provide the highest levels of charge for the lowest prices. While a single business using energy storage will not make much difference to the grid, the benefits to the business and customer are instantaneous. With battery prices constantly falling this will become a more attractive option for more and more business owners, thus increasing its uptake and therefore its benefits to the grid.
Pairing local battery storage systems with local renewable energy generation also offers more control and independence as well as being cleaner than the current energy mix from which the national grid receives its power. Off-grid storage and generation completely removes strain on the grid and also results in massive savings from demand charges which can be passed on to customers. Furthermore an off-grid EVSE system is significantly cheaper and easier to install as the site design and construction does not require physical connection to the grid and the digging of trenches and underground routing which that entails.
With the expansion of EVs today and over the coming years, it is essential that any challenges brought to the grid and electrical infrastructure are addressed immediately in order to nurture such growth. It is important that EV users are insulated as much as possible from such growing pains and that the government, grid and business owners are firmly ahead of the curve. The flexibility offered by smart charging, V2G and behind-the-meter storage systems will not only help the grid accommodate such growth, but also relieve much of the financial concerns held by many businesses and customers. Furthermore, the EV transition can be highly beneficial to grid balancing if the right technologies are deployed correctly, and can assist the grid in its own transition to balancing a more diverse renewable energy mix. Businesses who do not form a clear strategy as to how the inevitable EV transition and associated EVSE will fit into their plans risk being eclipsed by more forward thinking organisations, and could miss out on reaping the most exciting benefits of a carbon free future.