EVs are a double-edged sword when it comes to impacts on the grid. Some EVs can draw a huge load when charging and thus strain the local grid significantly. For example, Tesla’s superchargers draw as much as 120 kilowatts per vehicle, compared to basic Level 1 charging at 3.3 kilowatts or less.

At the same time, EVs, which have large batteries on board, can provide substantial value to the grid through appropriate vehicle-to-grid integration (VGI). A number of studies have looked at the potential grid value from VGI and found a range of values from about $5 a month to up to $100 a month. This article will look at the potential incentive value for EV owners in realizing these grid benefits, as well as the policy implications stemming from those conclusions.

California has pioneered EV development and is one of the biggest markets for EVs in the world. The state has over 130,000 EVs on its roads, and state policy is to achieve 1 million zero-emission vehicles (including EVs and fuel cell vehicles) by 2020 and 1.5 million by 2025.

Unfortunately, EV sales in California have dipped significantly since last summer and given the current trends, the state goals will not come close to being met. So it is becoming increasingly important for state policymakers and others who care about clean transportation to figure out effective ways to get sales back on track and growing.

Figure 1: California EV Sales Are Falling Rather Than Growing

Source: Center for Sustainable Energy

Free EV charging may eliminate the cost premium for EVs

Based on studies already completed, there is a strong rationale that EVs signing up for VGI could provide enough grid value to allow for permanently free charging. Free fuel for the life of the vehicle should be a powerful incentive for potential EV owners.

The average fuel cost for new light-duty passenger vehicles is $2,000 to $3,000 per year, depending on gasoline costs and miles driven. EVs reduce that figure substantially because electricity is about three times more efficient as a transportation technology than internal combustion engines (ICEs), and thus much less costly. However, with the current price of gasoline being relatively low on a national basis, the fuel savings from EVs is diminished. If we can, instead, make fuel costs zero for many EV owners by allowing them to sign up for VGI, the current cost premium for EVs compared to non-EV models or equivalents can be recouped very quickly.

In addition to fuel savings, EVs generally have lower maintenance costs than ICEs. New car shoppers would, under this VGI option, be able to absorb an upfront cost premium of, say, $10,000 with some confidence that that premium would be paid back in just a few years of ownership.

For example, a gasoline-powered Fiat 500 costs as little as $16,745 and up to $26,595 with options. A Fiat 500e, the electric version, costs $31,800, according to www.fueleconomy.gov. Averaging the cost of the Fiat 500 to $21,670 gives a cost premium for the 500e of $10,130. Figure 2 shows that normal charging of the 500e gives a $4,750 savings over the gas version in five years. But if charging is free, then that savings increases $2,750 to $7,500 over five years. That brings the cars close to cost parity, even without considering lower maintenance costs and other benefits of driving an EV.

This analysis assumes no other subsidies for the EV, but there is currently a $7,500 federal tax credit that brings the cost of EVs down substantially. Many states have additional incentives. California, for example, has a $2,500 state rebate for full EVs and $1,500 for plug-in hybrids. Under the analysis above, even when these state and federal incentives go away (as they are scheduled to do), the cost premium for EVs will be minimal, and maybe even zero, with zero fuel costs.

Figure 2: Comparing Fuel Costs of the Fiat 500 and 500e

Source: www.fueleconomy.gov

Recent studies support free charging for EV owners who sign up for VGI

What, then, is the analysis that supports this free charging option for EV owners who sign up for VGI?

One example is a pilot study by Lawrence Berkeley National Laboratory of government-owned EVs at the Los Angeles Air Force Base, which found that VGI could provide $100 a month per vehicle in up-and-down regulation benefits to the grid. This means that by changing the rate of charging or sending power back to the grid, the EVs could provide significant grid value that would otherwise be met by traditional power plants. As more EVs join the market and sign up for VGI, the combined grid benefits become substantial.

A California Public Utilities Commission (CPUC) staff paper from 2014 projected that up to 33 gigawatts of battery capacity from EVs could be available to the grid by 2022. As Figure 3 shows, the 2022 EV load would be equivalent to 60 percent of the 2013 peak summer power demand on the entire grid. That’s a lot of battery capacity to have for grid support.

Figure 3: CPUC Projections of EV Battery Capacity Available for Grid Support

Source: CPUC

What comes first?

We are now back to a familiar Catch-22 situation: these benefits may not be realized if California doesn’t provide compensation to EV owners for VGI, and compensation may not be provided to EV owners until we have larger numbers of EVs on the road.

The way out of this Catch-22 is for the CPUC to act on these earlier studies and conduct a more comprehensive study to establish the real value to the grid from VGI. If that study shows similar value as the CPUC itself cites in its paper, there would be strong justification for a statewide policy of free charging for any EV that signs up for VGI.

And that should be a big boost to the now-struggling EV market in California.


Tam Hunt is a lawyer and writer, owner of the renewable energy consulting company Community Renewable Solutions LLC, and author of the upcoming book The Solar Singularity: Why Our Energy Future Is So Bright.