Authors: Michael Giovanniello, Yining Zou
@Vlad Tchompalov on Unsplash
Accelerating the deployment of zero-emissions vehicles such as electric vehicles (EVs) was a major theme at the 2021 COP26 conference. This article explores how vehicle-grid integration (VGI) can support this transition, outlines VGI’s economic benefits, and shares the results of joint research by NRDC and the Energy Research Institute of the National Development and Reform Commission in China.
China has established itself as a leader in new energy vehicles (NEVs)1 , with 4.5 million NEVs (45% of the global fleet) on the road by the end of 2020. In 2021, China continued to deploy NEVs at a rapid pace, adding 2.99 million NEVs through November, for a year-on-year increase of 166.8%. This surge in NEVs and the corresponding demand for charging stands is poised to place significant strain on China’s power system. For example, in Beijing, where annual EV sales are projected to reach 1.2 million by 2030, new EV charging demand threatens to overwhelm the grid and disrupt electricity supply to residential areas. VGI presents a unique opportunity to manage this influx and build a more flexible and resilient power system in China and abroad.
What is Vehicle-Grid Integration?
VGI refers to ways of using idle EVs to provide services for the grid, such as providing a flexible source of demand, backup power, and energy storage. In practice, VGI takes three forms. First, there is managed charging (V1G), in which EV charging schedules are coordinated to avoid charging when demand on the power system is high (peak shaving) and increase the utilization of power assets when demand is low (valley filling). Second, there is vehicle-to-building (V2B), in which EV batteries power homes/buildings and provide backup energy. And third, there is vehicle-to-grid (V2G), in which EVs act as batteries for the grid, charging when electricity is cheap and renewable energy is abundant and feeding electricity back to the grid when prices go up.
What is the economic potential of VGI?
The latest research from the United States finds that VGI programs provide significant economic value. According to a recent study by Lawrence Berkeley National Laboratory (LBNL), V1G alone could provide 1 GW of equivalent energy storage capacity in California by 2025, saving consumers $1.5 billion and meeting one third of the state’s energy storage target. By adding V2G to the mix, EVs could form a total 5 GW of energy storage capacity, far exceeding the state’s mandate to deploy 1.3 GW of stationary energy storage by 2024 and enabling the grid to handle greater shares of renewables.
VGI can also offset the need for costly grid upgrades that are otherwise required to accommodate high shares of EVs. For example, in the San Francisco Bay Area, research by Pacific Gas & Electric and LBNL finds that incorporating just 30% of EVs into a managed charging regime would result in a fourfold decrease to the number of feeder transmission lines that would require upgrades.”
By enabling the power grid to operate more efficiently, VGI programs reduce costs for utilities. And through smart policies, such as those that establish “revenue decoupling, these cost savings can be passed to utility customers in the form of lower rates and bills. Consumers in the two utility service areas with the most EVs in the US have already reaped substantial benefits — over $800 million— from EVs under such as a regime.
How can we promote VGI in China?
Joint research by NRDC and leading research institutes in China finds that although the underlying principles of VGI are simple and the benefits are clear, implementing VGI programs can be challenging due the number and diversity of stakeholders involved. Overcoming this hurdle will require new policies, improved coordination between government agencies, more investment into critical new technologies, and initiatives to educate users on the benefits of participating in VGI programs.
This year, NRDC and the Energy Research Institute of the National Development and Reform Commission released a report summarizing the experiences of VGI pilots in China since 2019, offering key insights into how China and other countries can accelerate the implementation of VGI programs and providing concrete suggestions regarding facility standards, electricity pricing, market mechanisms, and user guidance. The report illustrates the significant potential of VGI in China, finding that by the end of the current 14th Five-Year Plan, China can leverage its EV fleet to form 500 GW of flexible power resources. “There are no obvious constraints that limit vehicle-grid integration,” the report concludes, and compared to stationary energy storage, V2G is a more economical means of reducing renewable energy curtailment.
1 The term NEV includes battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell electric vehicles ranging from passenger vehicles to heavy-duty commercial vehicles.
