Power Playbook: Revving up the V2G market

In this debut of the Power Playbook, our spotlight on the finance and investment side of the energy transition, Yusuf Latief investigates how Vehicle-to-grid (V2G) tech is becoming a burgeoning market space ripe with investment opportunities.

V2G systems have until recently been a technology in need of depth and exploration before fully coming onto the market as a widespread source of consumption management.

The systems involve electric-powered vehicles communicating with the power grid to sell demand response services, usually overseen by a third party, such as energy retailers or aggregators.

With increasing demand on the grid stemming from sources of variable renewable energy, it would be no exaggeration to call V2G a crucial component of the global energy transition.

According to IndustryARC, an analytics and consulting company, the global V2G market size is forecast to reach $28.12 billion by 2026, growing at a compound annual growth rate (CAGR) of 4.28% from 2021 to 2026.

Additionally, bidirectional charging – when electricity flows from the EV battery to the grid and then back to the vehicle – is a core component of this system and was analysed by ARC to grow at the fastest CAGR of 5.12% among the entire segment of charging types for electric vehicles over the forecast period.

Development of the tech surged in 2023, although companies seeking to invest in the market should still be selective about where they choose to do business.

According to AFRY Management Consultants Steffen Schaefer and Xavier Sichert in Market attractiveness for Vehicle to Grid, the ideal market for V2G would be one with a high share of intermittent renewable energy sources, a low share of interconnections with other countries and a high penetration of smart metering in private households and at corporate buildings.

In the meantime, as the market continues to develop, tech companies, automotive majors and utilities have been making moves.

This is what has caught our eye.

Octopus Energy launches first V2G tariff in the UK

Octopus Energy, the UK’s energy wunderkind, has launched the UK’s first mass-market V2G tariff, called Octopus Power Pack. The tariff uses V2G technology and Octopus Energy’s tech platform Kraken to balance charging and discharging when it’s best for the grid.

According to the company, the tariff works as a bolt-on that separates charging from the rest of the home and runs alongside each customer’s regular import tariff. Customers can also stack the benefits of payments for solar generation on top of this.

For eligibility, drivers need to stay below the usage limit of 333kWh per month and plug in their electric car for 170+ hours monthly (roughly six hours daily) to receive free charging. The rest of the process is automated.

Calculated under the assumption of 10,000 miles (16,093.44km) driven each year, the British energy giant claims that an average electric car driver will be able to save more than £850 ($1,070) a year in charging costs on the Power Pack, compared to charging on a standard variable tariff.

Octopus Power Pack is available to drivers with V2G-compatible electric cars, chargers and a smart meter available in the UK. Although there is currently only a limited number of car models that have this capability, car manufacturers such as Volvo, states Octopus Energy, have made commitments to release V2G-ready models soon.

The tariff also follows Octopus’ recent announcement of passing 200,000 customers signed up to its EV-optimised tariffs – Intelligent Octopus Go and Octopus Go – making up roughly a fifth of electric car drivers on UK roads.

The company clearly sees where the V2G segment is going and is preparing to be a key player.

Have you read:
Canada tests its first V2G for medium and heavy-duty EVs
China’s Reform Commission sets out V2G planning recommendations

V2G revenues

In the US, Nuvve Holding Corp. reported recurring revenues from its proprietary V2G services.

The tech company’s intelligent, cloud-based software, Nuvve GIVe, is a platform that transforms electric fleets into mobile storage resources, providing electric grid resilience while also generating recurring revenues to offset fleet operation costs.

In essence, multiple EVs would provide enough “smart load” energy to sell back to the market, providing a revenue stream and lowering the cost of owning the EV in the first place.

In its Q3 financial results, announced December 2023, the company’s CEO, Gregory Poilasne, said the company is on pace to increase its revenues by more than 50%, resulting from orders, sales and deployments of charging stations connected to the GIVe V2G software platform.

Additionally, in January, Nuvve announced a $16 million project win with Fresno Economic Opportunities Commission’s (EOC’s) 50-shuttle fleet, to electrify the fleet and implement its Nuvve GIVe software.

Nuvve assisted Fresno EOC, which is one of the largest nonprofit community action agencies in the US, in securing grant funding through the Carl Moyer Memorial Air Quality Standards Attainment Program and Pacific Gas & Electric.

OEMs & V2G

Tech companies, however, are not the only ones with claims to stake in the market. EV original equipment manufacturers (OEMs), for example, are arguably the most poised for market penetration as they are in the starting position of the race – they manufacture EVs, which are the backbone of the system.

Two weeks following Nuvve’s project win with EOC, Nissan announced the launch of a new service – Nissan Energy Share – in Japan, coming March 1, 2024.

The new service features Nissan-unique energy management technology that controls the charging and discharging of EV batteries.

The service comes after conclusion of the Japanese auto major’s research into the most efficient ways of managing energy through EVs. Specifically, Nissa conducted different studies and field tests in locations such as Fukushima, validating its proprietary technologies for autonomously charging and discharging EV batteries.

Offered primarily to companies, businesses and municipal governments, Nissan said that the service is designed to enable optimal energy management in line with the needs and circumstances of customers; a ‘one-stop service experience’, from planning and system build-out to maintenance operations.

In addition to the system itself, the auto major says users will be able to apply for different subsidies, although details have not yet been released.

Also of interest:
Power sector measures key for smart charging in emerging economies states IEA
Sweden’s Polestar launches vehicle to grid and virtual power plant projects

Time pressure

Although tech and automotive companies are making moves in the right direction, there is a palpable time pressure that we also need to be cognizant of.

The market is clear, but the problem of managing increased loads from soaring rates of renewables coming online and EVs coming onto the road will not be going away anytime soon.

In the Netherlands for example, the problem of renewable energy causing grid lock has given grid operators headaches for years already, causing them to increasingly turn to flexibility as a solution.

The compact country is expected to have over 10 million battery-electric cars on the road by 2044; but with a grid at capacity, managing this demand will continue to be a pain point, perhaps mediated by V2G.

Add to this the upcoming deadlines for bans on internal combustion engines (ICEs) – both Europe and the UK angling for 2030 – and the weight of this demand only increases.

Surely then, it only makes sense that we tap more into the market, which provides lucrative opportunities alongside a clear route to managing these critical demand spikes.

The pressure to rev up the V2G market has been gaining urgency and clearly top industry players are responding. But what do you think? Who do you see as leading the market and what more is needed, whether from policy or from technology, to propel the market forward?

Let me know.

Cheers,
Yusuf Latief
Content Producer
Smart Energy International

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