Markets - 28/January/2019

Real life vehicle-to-grid seeks market opportunities

Parked electric vehicles plugged into the electricity network with charged batteries could sell stored power back through the network. Nissan is the first to qualify a car battery system to sell its stored power into an existing market for primary regulation services to maintain grid frequency

 

In theory: Parked electric vehicles plugged into the electricity network with charged batteries could be enabled to sell stored power back through the network

In practice: Nissan is the first to qualify a car battery system to sell its stored power into an existing market for primary regulation services for the maintenance of grid frequency

Missing: A commercial driver for power networks or their customers to buy electricity specifically from privately owned car batteries

Concern: Charging from or discharging to the electricity network by concentrated numbers of battery vehicles at the same time may create problems for local security of supply, but can be mitigated with time-of-use incentives

Outlook: Uncertain future for selling electricity to the grid from electric car batteries because of uncertain value of doing so

Next step: More research into power system needs and the impact on networks of charging electric vehicles

 

Globally electric mobility seems to be at the beginning of a steep growth curve. Over one million new electric cars were sold around the world in 2017, 54% more than in 2016, setting a new record. Half the sales were in China. The 3.1 million electric cars on the roads is, however, a mere 0.3% of the around 950 million passenger cars worldwide. But from these small beginnings, climate protection and health concerns are pushing car companies to reduce emissions and speed up the transition from traditional petrol and diesel driven internal combustion engines to electric or other cleaner technologies.

With the writing on the wall, concerns are growing in some quarters as to whether electricity networks and generation will be able to cope with the expanding electric vehicle fleet, especially where growth is concentrated in certain regions or countries. Simultaneous, densely located vehicle battery charging, especially at night, could cause leaps in electricity demand that create difficulties for electricity transmission grid operators. Early UK trials have shown that widespread and uncontrolled electric vehicle charging could double peak loads within distribution networks not designed to deal with the additional power demand.

Controlling the charging of vehicles using uni-directional technology from grid to battery has the potential to relieve such congestion by spreading individual vehicle charging over time. In addition, if the vehicles are connected to the network, but not charging, the use of sophisticated two-way charging technology could make the battery available to the power system, to be called upon for fine tune adjustment services. A market is needed for battery owners to be paid for the service.

Vehicle to Grid (V2G) technology can open market opportunities for car owners, battery charging technology providers and transmission grid operators by facilitating the potential of the electric vehicle fleet for electricity storage, trading and transmission grid services. V2G chargers allow a bi-directional flow of electricity between vehicle batteries and the charger connecting to the electricity network. System flexibility provided by V2G at scale could contribute to grid frequency maintenance, delay investments in grid upgrades, facilitate the integration of variable supply from renewable energy, reduce generation curtailment, lower grid carbon emissions, and provide low-cost energy for driving, according to Element Energy, which is leading a V2G research project, “V2GB – Vehicle to Grid Britain”. The driver’s use of the vehicle would not be interrupted, says Element. V2GB is due for completion in March 2019.

Sale of grid services through V2G technology offers potential earnings for EV owners where a market framework develops. People spend a significant share of their annual income on cars that are parked for most of their lifetime. Electric cars could mean cleaner transport and commercial use of their batteries could make this expensive transport resource more attractive.

 

 

 

UK trials

OVO Energy, one of the UK’s largest independent energy suppliers, is offering 1000 households the chance to trial V2G with 30 kilowatt hour (kWh) and 40 kWh Nissan LEAF car batteries for two years. This includes a warranty against battery degradation and allows use of the charger for free. The trial is funded by the UK government’s innovation agency Innovate UK.

The possibility of earning money could help speed up the expansion of the electric vehicle fleet since affordability is the “first key barrier” to their uptake, says ACEA, Europe’s automobile manufacturers association. Electric cars made up just 1.5% of total car sales in the EU in 2017. Of that small proportion, 85% of sales were concentrated in six economically well-off western European countries. High prices mean market share is only substantial where there are extensive fiscal and non-fiscal incentives, says ACEA.

Germany’s federal economy ministry expects electric cars to remain more expensive than petrol, diesel, hybrid and natural gas cars until at least 2030. Its draft integrated national energy and climate plan released in January 2019 sees falling battery prices driving an 11% decrease in electric car costs to €28,200 a car in 2030 from €31,600 in 2021, calculated in 2016 prices. But the outlay is still high compared with the cost of petrol driven cars, expected to remain stable at €24,000 apiece in the 2021 to 2030 period. A Nissan Leaf currently costs around €32 000 in Germany, while a similarly sized petrol car can be had for around €10 000 less.

Public knowledge of V2G potential is hazy. A December 2018 German review of 284 national and 36 international studies and research projects bemoans the lack of research work on the issue. It highlights a dearth of information on areas including: the impact of simultaneous charging on local transmission networks; future mobility trends like car sharing; car charging in rural areas; voltage quality in electricity distribution networks; and network expansion rather than specific modelled network projects. Technology developments are moving so fast that research results often do not account for the latest capabilities, says the review. Real-life projects exploring V2G possibilities have leaped to the demonstration phase, challenging research to keep pace.

These projects include a partnership between EDF Energy, a UK energy company, and Nuvve, a green technology company, announced in October 2018 to install up to 1500 V2G chargers at premises belonging to EDF Energy and its UK business customers to provide up to 15 megawatts of energy storage capacity. The stored electricity can be sold on energy markets or support electricity grid flexibility at times of peak energy use, EDF Energy says. “V2G chargers could help businesses generate revenues from vehicles that have previously only been a cost on their balance sheet, saving hundreds of pounds per vehicle a year.”

In the Netherlands in February 2018, Enervalis, a software company, launched a project to test and validate V2G technology in the city of Amsterdam, working with Alliander, an electricity distribution grid operator and New Motion, a provider of smart charging solutions. Bidirectional chargers were installed at public locations around the city with the aim of users receiving a financial reward through a mobile app. In addition, the impact of bidirectional charging on the low voltage electricity grid will be tested and controlled by Alliander.

 

Frequency control

While the UK and Netherlands projects are still setting up channels for earnings to flow to car owners, an initiative in the small German town of Hagen has opened a market door. Japanese car maker Nissan and partners caused a stir within the electricity supply industry in October 2018 by fulfilling the preconditions to enable a Nissan Leaf car battery to enter the existing frequency control market, providing immediate access to potential earnings.

The partners have used innovative charging and energy management technology with a Nissan Leaf electric car battery to fulfil all the technical regulatory requirements to provide primary regulation for maintaining grid frequency. Primary control power, also known as frequency containment reserve, cuts in just seconds after a transmission grid frequency problem occurs. Traditionally this comes from conventional power stations, but batteries embedded in the grid are eminently suited to the task and are already participating in the market. Primary control power must cover for frequency deviations for 15 minutes before secondary control, also known as automatic frequency restoration reserves, kick in. These usually cover for one to two hours and are followed, if necessary, by tertiary control or manual frequency restoration reserves, which free up the secondary control in case it is needed again.

Integrating car batteries as a regulating reserve for the German grid is “a breakthrough in the establishment of V2G technology”, says The Mobility House (TMH), the project’s technology partner responsible for marketing the primary control power.

The Nissan Leaf’s V2G battery, combined with a Werdohl-Elverlingsen stationary battery embedded in the grid, supplied by Enervie, a regional energy company, were prequalified by Amprion, a transmission system operator, to supply primary control power. Together they are part of a pool of stationary batteries aggregated by TMH. Testing began in October 2018 and since 16 December 2018, Nissan Leaf has been an official participant in the primary control market.

“Primary control power was chosen for our project because in this market segment payments are higher. It has the most stringent technical and security-of-operation requirements, but our aim is to show that we can meet these with electric vehicles,” says Michael Schreiber, head of product development at TMH. Primary control power must be bid in multiples of one megawatt (MW), which requires pools of vehicles to aggregate their offering with that from other assets, like banks of stationary batteries, to participate in the market.

 

OVO Energy has estimated the following costs and savings from V2G for its UK trial:If a customer discharges an EV battery at 5.4 kW from 4pm to 5pm every day for a year, the annual export potential to the grid is 5913 kWh. The customer is likely to use some of the energy to power their home, say 14% or 830 kWh annually. The kWh not used at home can be sold back to the grid, for a net export payment of £0.06/kWh from OVO Energy. This would mean £305 of savings annually on the household electricity bill:The estimated average annual charging cost for a Nissan LEAF is £282.14:

(7500/4.2) x £0.158 = £282.14

Using this example, the estimated average annual costs of £282.14 would be covered by the estimated annual export credit of £305.

Source: OVO Energy

 

Virtual power stations

As conventional fossil fuel power stations are phased out to comply with carbon dioxide emissions targets, electric vehicles with V2G capability can enter the market for grid support services along with stationary batteries. As so-called virtual power stations they aggregate energy from renewable and other sources to supply frequency control grid services.

Germany contracts all its primary control capacity through a joint auction with transmission system operators from Austria, Belgium, France, the Netherlands and Switzerland for a total 1470 MW of primary control power. In 2018, the monthly primary control power capacity price on the market fluctuated between a maximum of €13,013 a MW in January 2018 to a minimum of €6753 a MW in June 2018. This was substantially above the highest monthly prices for positive and negative secondary control power capacity prices — positive for injecting electricity and negative for withdrawing from or stopping injection of electricity to the grid — of €2344 and €1820 MW in October and November 2018 respectively.

In a 2018 analysis, Tennet, a transmission system operator in Germany and the Netherlands, said the primary control energy price ranged from €10-27 a MWh in 2017 for joint grid primary control in the six cooperating countries. This suggests that an aggregation of 1 MW of electric vehicle batteries, the smallest volume bid allowed in the joint market, available for 4000 hours a year earning €10 a MWh a year could earn around €40,000. Assuming each battery has a capacity of 24 kilowatts, the pool would comprise 42 car owners. If they received just half the earnings, the rest being shared with the aggregator company and the transmission grid operator, each owner would get gross payment of nearly €500 a year by making their car batteries available for the service.

A continental scale pilot study of travel behaviour in Europe shows the share of private cars in motion at the same time is never above 12%, up to 15% for commercial vehicles, suggesting batteries could be available for long periods of time.

 

Hurdles

Frequency control reserve is one of the most valuable network products because for conventional power stations, still the main providers, it is challenging to restore and maintain exact frequency. In principle, batteries are technically more suited for providing primary control compared with conventional power plants. This could, over time, lead to a fall in price levels, warns Bernhard Strohmayer, head of energy markets and mobility at the German Renewable Energy Federation.

Adapting pre-qualification rules to better suit batteries, whether in vehicles or stationary, could help advance their use in all types of frequency control reserve. Allowing batteries to, for instance, supply either negative or positive energy instead of requiring them to standby for both would mean batteries must no longer be held at just 50% of full charge. Allowing batteries to participate in any market at any one time, as in Australia, rather than in just one market as at the moment in Germany, would make their business case more attractive, says Strohmeyer.

The International Energy Agency (IEA) agrees regulatory hurdles still need to be tackled, including the double taxation applied in some countries on power taken from and provided to the network by batteries. The EU is working on the problem. Its January 2019 draft directive for the internal electricity market says storage facility owners active in the electricity market should not be subject to double charges for electricity used on the premises and when providing flexibility services to system operators. In a 2018 global electric vehicle outlook, the IEA also calls for aggregators to be able to participate more easily in the short-term wholesale market and in system services power markets. Aggregating generators with energy to sell and aggregating customers who will reduce demand on request for a price creates larger service products to bid into these markets. With bigger products aggregators have more at stake and more of an incentive to respond to price signals than small, individual generators or demand-side players.

Strohmeyer foresees V2G’s commercial potential taking off when specific markets for flexible product services develop. V2G potential will be used best if the aggregator, the grid operator and the car owner can all benefit in a future mass market where individual margins are small. Digitalisation and the Internet-of-Things provide the means to make it easy to sell services from individual batteries into the grid using applications that are simple for car owners to use and do not interfere with car use, adds Strohmeyer. In grids in north-west Europe, V2G is probably most useful at distribution network level.

But markets that recognise the value of electric vehicle charging capacity sufficiently to put a price on it do not yet exist. Discussions on what is needed for those markets to develop have started, but have not progressed beyond theoretical consideration. When and if theory becomes political practice, resulting in regulation to facilitate the commercialisation of V2G, remains to be seen.

 

 

Writer: Sara Knight

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