Charging Forward: Electric Vehicles and the Future of V2H and V2G

The electric vehicle (EV) revolution is upon us. EVs are fast becoming the preferred primary mode of transport for homeowners. Beyond getting from A to B, an additional benefit of the widespread adoption of EVs is the potential for EVs to be used as a power source for the home and the grid through bi-directional charging – otherwise known as ‘vehicle-to-home’ (V2H) or ‘vehicle-to-grid’ (V2G) charging.

As we discussed in a previous article (Driving it Home: How Australia Can Make the Switch to Electric Vehicles), bi-directional charging works by taking alternating current (AC) electricity from the grid or the home’s solar panels and converting it into direct current (DC) electricity to charge the EV. This effectively turns an EV into a home battery when not in use, with the energy being held on standby to be put towards multiple purposes. Any leftover charge in the EV can then be used to power the home or to export that energy to the grid at times of high demand.

V2H – PV your EV

The general consensus is that EVs are environmentally friendly because they do not produce exhaust emissions that harm the atmosphere. However, to charge your EV, the electricity must be generated from somewhere, meaning that in practice, EVs are only as green as their power supply. Another growing myth is that the widespread uptake of EVs will place greater strain on the power grid as more and more people make the switch from internal combustion engine (ICE) vehicles.

However, the rise of Australia’s world-leading rollout of rooftop solar systems over the past decade or so offers the means to transition to a cleaner vehicle fleet fueled by sustainable carbon free solar power, while reducing energy demand during peak periods (the so-called duck curve issue) and saving consumers money on peak charges.

Notably, while EVs that take their charge from the grid are now cost-competitive with comparative conventional ICE vehicles over their lifecycle, when coupled with rooftop solar and a battery, conservative calculations have households saving up to $12,000 over a 15-year period¹.

V2G and VPPs

With V2G charging, the EV battery can be used to provide grid stabilising services. EVs have large, powerful batteries with low startup, shutdown, and standby costs. When combined on a large scale, the potential energy source is massive. If enough EVs are plugged into the mains with bi-directional chargers and linked by software in a network known as a virtual power plant (VPP), they can be used like a very large commercial-scale battery.

How it works: the software programs track the performance of the grid by monitoring any generation spikes and dips during off-peak and peak hours, respectively. Network operators can then use the aggregated pools of PV systems, batteries and EVs to instantly and automatically modify generation or consumption to stabilise grid frequency and voltage.

Demonstration Projects

In Australia, V2G technology is slowly being introduced and certified for use. For instance, a multi-million dollar EV home-charging trial is looking at the role EVs can play in soaking up excess solar energy and improving grid stability. The trial will recruit 176 EV owners across the ACT, Victoria and Tasmania to participate, with smart EV charging hardware or control boxes installed at each participant’s home. Jemena, AusNet Services, EvoEnergy, TasNetworks and United Energy will monitor the impact of these EVs on their networks and then take the lead role in efficiently managing the charge times of the vehicles. ARENA is providing $1.6 million in funding for the $3.4 million trial, which will help to purchase charging hardware and network monitoring equipment.

Another ARENA project looking into V2G charging technology is the Realising Electric Vehicle-to-Grid Services (REVS) project which involves 51 Nissan LEAF EVs from the ACT Government fleet deployed across the ACT to test and provide V2G services using bi-directional chargers. The REVS project will test new revenue streams for providing the grid stabilising services that avoid blackouts and improve energy security, otherwise known as Frequency Control Ancillary Services.

Regulation: The Integrated Resource Provider

The long-awaited final determination and National Electricity Rule (NER) change in relation to the integration of energy storage into the National Electricity Market at the end of 2021 will create a new participant category, the Integrated Resource Provider. This change was brought in to recognise and capture participants with bi-directional energy flows and to avoid dual registration and other deficiencies in the NER’s application to hybrid and storage facilities.

As we discussed previously on the topic (read here, here and here), the rule change will enable aggregators of VPPs to recognise small-scale storage and provide market ancillary services from both generation and load. This aspect of the reform will come into effect on 31 March 2023, with the full changes coming into effect on 3 June 2024.

Barriers to Uptake

Cost

The biggest barrier to EV adoption is still upfront affordability. Bi-directional chargers cost in the region of $10,000, or a little less than a standard home battery. However, EVs have three to four times the capacity of a home battery so on a cost per storage basis this works out a lot cheaper that the standard home battery. Moreover, the cost of a bi-directional charging unit is predicted to fall in the short to medium term.

Higher initial costs of adopting bi-directional charging for EVs may also be offset by their potential long term savings. For example, if an EV can be charged using the home’s rooftop solar installation or at a free charging station at work or a local shopping centre, this can work to significantly reduce household bills. Alternatively, EVs can be charged during off-peak hours and sold back to the grid during peak times to maximise profit for the owner.

Technological Advancement

Not all EVs have the capacity for bi-directional charging and there is currently no global standard for charging, meaning that few models of EVs are equipped for this new technology. There is also still lingering apprehension surrounding the use of EVs and bi-directional charging, from safety concerns to concerns about draining the battery too quickly.

From a safety perspective, there are measures built into the chargers to mitigate any safety issues. Bi-directional chargers work in a similar way to solar inverters and have a sensor to monitor the load of the house and how much power is being pumped in and out of the house. If the sensor detects that system voltage has been breached, the charger will switch off.

With regards to deterioration, while batteries by their nature do wear out faster the more you use them, bi-directional charging does not have a detrimental long-term impact on the battery because charging and discharging is less intensive than driving. Ongoing technological advancements are reducing the deterioration issue further, meaning that batteries made today and in recent years are far more durable than previous iterations.

Government and Industry

As discussed above, the electrification of transport provides significant opportunities to provide energy storage and grid balancing services, but this will require effective and targeted government and industry intervention to facilitate the transition.

In the short term, measures that can help to support and manage the transition are:

• Tax rebates and similar relief for consumers who buy EVs, including reduced or no stamp duty, free registration for the first couple of years and no road user charges for EVs until EVs account for a proportion of annual vehicle sales. In Western Australia, the recently announced Clean Energy Car Fund will include $36.5 million to provide up to 10,000 rebates of $3,500 to Western Australians that buy a new electric up to a value of $70,000.
• Industry support for the introduction of smart charging programs, providing electricity bill credits to EV owners that voluntarily opt-in to managed charging regimes.
• Incentives from Government and utilities to residents to charge their EVs during the day when energy demand is lower. This might mean, for example, providing EV charging facilities at workplaces and in public areas. From a transmission perspective, timing is key to maximise the use of a network connection without overloading it. If everyone charged their vehicle in the evening after they got home from work, this would put further pressure on electricity supplies at this peak time.

In summary, V2H and V2G technologies have the potential to offer significant benefits to help reduce demand on electricity networks, and when coupled with domestic solar systems, can enable EV drivers to use greener and cheaper electricity – and fundamentally, help to achieve Net Zero.

For more information, please contact Matt Baumgurtel or David O’Carroll.

The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.