What is VGI and why do we need it?

To effectively fight climate change, we need to address two of the biggest culprits of greenhouse gas emissions: electricity generation and transportation. We can do that, and use energy more efficiently, by getting more energy from renewable sources, such as solar and wind power, and encouraging more people to drive zero-emission vehicles (ZEVs). An innovative approach to enable both goals is vehicle-grid integration, or VGI.

Renewable electricity may be clean, but it’s not always available when we need it. The sun isn’t always shining and the wind isn’t always blowing when we want to watch our TV or do our laundry. One way to overcome this drawback is to store more energy from renewable resources. And we can do that with electric vehicles which, it turns out, are literally batteries on wheels.

That’s why VGI—effectively using EV batteries to store renewable energy—is a growing and important piece of the decarbonization puzzle. If we can get VGI right, we’ll be able to connect more renewable power sources to the grid and have more clean cars on our roads, all while ensuring lower electricity costs and a steady supply of electricity from the power grid. We can realize the benefits of VGI through thoughtful infrastructure planning, smart charging (V1G), and enabling EVs to strategically supply power to the grid (V2G).

Thoughtful planning of charging infrastructure placement: workplace and public

With thoughtful planning of public and workplace charging infrastructure, EVs can be plugged in during the day, at workplaces let’s say, to absorb the excess power generated by renewables, particularly solar. A happy side-effect is that some workplace and public charging can help avoid end-of-workday grid demand peaks as workers return home and, for example, are cranking up their air conditioners just as the setting sun causes solar generation to decrease.

The location of charging stations is just as important as when they are used, if we don’t want to strain them. This means, for instance, placing chargers close to solar panels or other power sources, not locating too many chargers in certain pockets to avoid overloads, and reducing the distance power needs to travel to mitigate losses. An added bonus is that you can also place charging stations in less congested areas, to improve accessibility and reduce traffic-related travel time.

This shows the total load after subtracting power generated from renewables ("net load") in California on a typical spring day from 2012 through 2020. VGI can help absorb over-generation midday (orange) and reduce evening peak load (blue). Adapted from CAISO

Having more charging options at home and at work is crucial to giving people confidence that electric vehicles can meet their transportation needs. Rates that encourage drivers to charge during off-peak times or when the grid has surplus clean power can provide an attractive economic incentive, by way of greater fuel-cost savings, for non-EV drivers to go electric. Proper charging infrastructure and compelling rate structures can set in motion a virtuous cycle of cleaner cars and cleaner power.

Smart charging (V1G)

Smart charging, or what those in the business like to call “V1G”, also holds great potential for boosting renewable energy and EVs to the grid. V1G refers to pausing, delaying, or ramping EV charging up or down, in response to an economic incentive, such as a higher cost to charge, or to stabilize the flow of energy from the grid.

For example, when an EV driver arrives home from work in the early evening, but surplus wind power won’t be generated until around midnight, the driver can program the EV to defer charging until clean and inexpensive wind power is available. That way, the driver can charge the EV when power is cheapest and still be fully charged for the morning commute. Many EV manufacturers include smart charging or scheduled charging capabilities in their charging apps, so this can be done with the click of a button on your cell phone.

Smart charging also comes in handy when several EVs in a large apartment complex are charging at the same time. This surge in demand can strain the local power equipment and may even drive up electricity bills for all the users and/or the apartment complex. Coordinating charging times for multiple EVs, which can be simply implemented using a software or by a service provider, avoids these problems.

All this can all be done easily by the “smarts” embedded in charging stations, your cell phone, and EVs. In all automated smart charging services, the driver can define when the car will be needed and with what range. For example, the driver can indicate the need for a full battery before they commute to work in the morning. The smart charging system ensures that need is met while optimizing for low cost electricity from the grid. In this manner, electric vehicles can store power to help the grid and potentially cut charging costs while still allowing drivers to use them for their primary purpose, as vehicles.

Returning power to the grid (V2G)

Courtesy of NISSAN

A more recent development in VGI technology is vehicle-to-grid services (V2G). V2G allows electric vehicles to discharge some of their stored energy back to the power grid. A prime application of this is with electric school buses, which sit idle for long periods, during summers, weekends and holidays. It’s easy to charge electric buses when electricity rates are low and discharge electricity to the grid when it’s strained or needs more power. The bus is just sitting there, so why not let the bus owner make a few bucks with the battery while also helping utilities lower their operating cost? That way, everybody wins.

V2G can also help prevent grid disturbances from deteriorating into outages. Let’s say a large generator goes down. If the utility doesn’t find another power supply quickly enough, this disturbance could set off a cascading series of events that ultimately result in a blackout. The good news is that your EV can help prevent this by allowing the utility to draw backup power from your EV battery. By tapping a large number of EV batteries for a short time (with permission), the utility can keep the power flowing while it repairs the generator or locates an alternative generator.

This type was service was piloted in 2016 and 2017, when a small airport fleet in LA successfully offered V2G services over a short time frame (in five minute intervals) to balance energy supply and demand in California. Case studies (see here and here) are fast emerging that showcase the substantial, although untapped, potential of V2G as a storage resource.

The many flavors of VGI services

As the figure below depicts, VGI can help manage the grid in a number of ways. While this image is full of complex jargon, the key takeaway is that VGI is beneficial in a range of respects for different stakeholders. For example, customers can use VGI for services that reduce the overall cost of charging or make it easier for them to use renewable power at home. The utility can benefit from local distribution and transmission grid services, to reduce congestion on its lines and equipment, and guarantee a secure, safe, and cheap supply of electricity.

Overview of the variety of VGI services and stakeholders benefited. Courtesy of Rocky Mountain Institute (RMI)

The most significant benefit to a utility (and ultimately to its customers) may be using VGI technology to manage swings in the supply of renewable energy. This is especially important as renewables become a larger part of the energy mix. EVs, by virtue of their embedded batteries, give the utility more control of renewable energy, so it can use more renewables.

Finally, in the high-voltage sections of the grid, EVs can provide stability services such as balancing of supply and demand or congestion management to prevent overloading of power lines. V1G and V2G services can do this with relatively low investment costs. In California, the potential for load balancing with V1G could be a $1.5 billion business opportunity by 2025, and a $13 billion proposition if the utility also adopts V2G services. When monetized appropriately, providing VGI services can lower the cost of managing the grid for utilities, and the cost of charging and owning an EV.

VGI is an efficient and low-cost way for all of us—utilities, grid operators, car owners, and electricity customers—to use more renewable energy and make EVs more attractive while reducing the cost of maintaining the grid. It’s a win-win-win for utilities, their customers, and the environment. The value of VGI is clear. Now we need policies and market mechanisms that recognize and unlock this value. Look for my upcoming blog on possible incentives to facilitate VGI.