Why is Vehicle-Grid Integration Important?
VGI can directly achieve five important public policy goals:
1. Decarbonize the transportation sector by accelerating electric vehicle (EV) adoption
Transportation represents ~30% of nationwide greenhouse gas (GHG) emissions. To address this, 13 states - including several of the nation’s largest automotive markets - have established ambitious EV adoption goals. Accelerated EV adoption is needed to meet these goals, and VGI can help address barriers to faster EV adoption by accomplishing the following:
Reduces the total cost of EV ownership by lowering charging costs and unlocking new revenue streams for EV owners and fleet operators.
Unlocks new customer value propositions beyond mobility, such as home backup power and grid services when a vehicle is not in use. These are especially relevant during COVID-19 due to the increased number of people working from home and increased hours that EVs remain parked.
Unlocks new revenue streams for vehicle manufacturers, thereby improving the business case for scaling up EV product design, manufacturing, marketing, and sales.
Improves the utilization of public charging infrastructure so that further investments in charging equipment can stretch further.
2. Support decarbonization of the power sector by providing essential grid services as renewable energy penetration increases
Eleven States, Washington D.C., and over 200 individual cities and counties have committed to a 100% clean or renewable energy future. As the share of solar and wind power on the grid increases in support of these goals, a number of essential grid reliability services will need to be provided by clean resources instead of traditional fossil-fuel resources. VGI-enabled EVs can play an important role in this transition by providing these services. The table below illustrates a few of these important services that VGI can provide:
3. Increase affordability by reducing electricity bills for all customers
VGI can increase the affordability of electricity bills in two distinct ways. First, VGI can help limit overall electricity system cost increases and in turn, limit future customer bill increases. By leveraging EVs to provide necessary grid services, VGI offers an approach that can be more cost-effective than traditional means of providing the same services. For example, it can reduce the need to build new power plants to meet peak demand. VGI can also provide more flexible resources to manage the integration of wind and solar, and it can take advantage of abundant, low-cost solar energy in the daytime to power vehicles at night. Second, in addition to directly reducing system costs, VGI can help to reduce electricity bills, even for non-EV owners. Because VGI plays a role in accelerating EV adoption, it also helps to place downward pressure on overall electricity rates by increasing the total electricity sales relative to the grid’s fixed costs.
4. Improve grid resiliency and security, including during wildfire risks events
The prospect of more frequent grid reliability events, such as extreme weather events and wildfire risk, creates an urgent need to enhance grid resiliency. California’s public safety power shutoff (PSPS) events highlight the need for microgrids to support vulnerable communities, as well as the value of on-site backup power for customers experiencing an outage. Fortunately, VGI-enabled vehicles can offer a solution by using EV batteries as a source of backup power during outage events. This approach could provide a relatively cost-effective microgrid solution as well as unlock a new value proposition for customers seeking backup power during a planned or unplanned outage. Meanwhile, by using EVs as sources of backup power, there can be a reduction in harmful emissions caused by diesel backup generators that may otherwise be implemented by customers and/or microgrid planners.
5. Foster economic activity through innovation, competition, and market transformation
The multifaceted ecosystem of firms engaged in the VGI marketplace reflects the depth and diversity of private investment. As an example, over 50 automotive original equipment manufacturers (OEMs), EV supply equipment companies, and EV service providers are engaged on the topic of VGI in California. These market participants engage with equipment and software providers, project developers, financers, engineering, procurement, and construction companies, and operations & maintenance experts. VGI is well positioned to leverage existing strengths in the high-tech industry to build a vital new segment of the clean energy and transportation economies.
