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Your Electric Car May Yet Generate a Small Income for You

Vehicle to grid technology has been talked about for a decade and half, and an industry consultant suggests it may finally start paying off.
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A small fleet of Mini Coopers at the University of Delaware both draw electric power from the grid and return it, based on the needs of the moment. (PHOTO: UNIVERSITY OF DELAWARE)

A small fleet of Mini Coopers at the University of Delaware both draw electric power from the grid and return it, based on the needs of the moment. (PHOTO: UNIVERSITY OF DELAWARE)

Back in 2011 Dan Ferber told us about "a new kind of car payment," in which (parked) electric cars earned their owners some money by helping regulate the grid. The concept, known as “vehicle to grid” or V2G, dipped its toe into the marketplace this past February when a fleet of Minis at the University of Delaware nosed up to charging stations that sent both power and signals two ways.

V2G is not just a matter of tapping the electricity stored in the cars’ batteries during peak demand times, although that’s certainly one facet. The Minis of the blue hen state can juice up or down at 19kW, according to the school’s Center for Carbon-Free Power Integration, which says that’s “about the average power consumption of 12 U.S. homes.” But a possibly larger, if less intuitive, benefit lies in the ability of lots of cars to help control the frequency of the grid electric supply—60 hertz in United States—instantly.

Ferber quoted Willett Kempton, sort of the father of V2G at Delaware:

“We looked at the value of peak shifting and get a dollar number of $300-$500 per year,” Kempton recalls. “Then we looked at regulation, and holy cow, we can use the same car and it’s worth $5,000 a year!” And the demand for regulation is high enough that millions of cars worldwide could participate.

Like electric vehicles themselves, there was some growing that needed to be done, leading the feds to dub the idea “tiny but promising.” How tiny, and how promising? The consultants at Navigant Research put out a report today just on the regulation aspect of V2G, and predicted that worldwide revenue, currently less than $900,000 a year, will grow to $190.7 million by 2022. (Navigant makes money by selling their report, but an abstract is available here.) That change in nine years is both a big percentage jump and a small number in a multi-trillion-dollar auto industry, but then V2G was mooted long before Prius and Teslas were on the market, and it’s only now started making any money.

“Demonstrations and pilot projects using fleet vehicles in the United States, several Western European countries, and Japan,” according to Navigant, “are beginning to show returns and prove that V2G technologies can serve as effective assets in various grid services.”

It shouldn’t be surprising if you’ve been paying attention to how green the Pentagon has become, but the Department of Defense is leading the way in the U.S. Earlier this year it announced that the military will spend $20 million for a fleet of about 500 electrical vehicles for stateside use that will use V2G. Appropriately for car-mad Southern California, the Pentagon expects Los Angeles Air Force Base to be “the first federal facility to replace everything from passenger sedans to shuttle buses with electric versions.” The Air Force figures it can cut costs and still enhance their mission using V2G, according to officials.

Despite that official imprimatur, Navigant suggests the U.S. will not be the only player in this new business opportunity; Navigant expects $50 million of that 2022 figure to be generated in North America. While the National Institute of Standards and Technology had talked about having infrastructure in place that could serve a million plug-in electric cars by 2015, the legal framework for serving electric cars may be more cumbersome than the physical infrastructure. The costs and hassles of being early mean that organizations with lots of vehicles (i.e. the Air Force) or the ability to aggregate lots of drivers' actions will spearhead V2G adoption at first, while places with heavily regulated local power markets and vertically integrated utilities likely will blunt any advance.

Countries with more flexible electricity markets and rules, a greater penetration of electric vehicles, and those with lots of wind and solar (which both feature intermittent output and frequency variability) will probably zoom ahead. China, as seems usual, is a prime candidate. Japan is a big market for electric cars, too. Australia and South Korea are promising. In Europe, Denmark sampled an electrical-storage-oriented V2G model four years ago (improved battery technology is key, they learned). And developing countries may leap a couple of generations of grid technology to beat the U.S., just as we’ve seen occur in telecommunications.

Not every electric or hybrid is necessarily a “grid-integrated vehicle,” i.e. ready for V2G. There is some hardware involved, and some patent licensing (much from the University of Delaware), owner-convincing, and law-changing required before even those cars and tracks that are GIVs will be ready for prime time. And the amount you might make—Navigant cites $5 a day—isn't huge. But there's still some money on the table, and sorry Archimedes, but that’s what will move the world.