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Navigant Research forecasts rapid growth in V2G for ancillary services to 2022; $190.7M in frequency regulation revenue by then
18 October 2013
In a new report, Navigant Research forecasts that global vehicle-to-grid (V2G)-enabled plug-in electric vehicles (PEVs) servicing the ancillary services market will grow at a compound annual growth rate (CAGR) of 64.3% from 2013 to 2022.
In North America—which Navigant sees as the strongest initial market opportunity—Navigant sees frequency regulation revenue for PEVs growing from just more than $500,000 in 2013 to just less than $50 million in 2022. Globally, Navigant Research forecasts that frequency regulation revenue will reach $190.7 million by 2022. Navigant Research has not developed revenue forecasts for PEVs participating in demand response (DR) programs, as it is currently unclear how PEV owners will be compensated.
Commercial fleets will be the foundation of the market, Navigant projects in the report “Vehicle to Grid Technologies.” However, individual participants will begin increasing beginning in 2016 in select regions, the company anticipates.
Conventional PEVs will add 2,410 MW of capacity to residential and commercial DR programs globally, according to Navigant, with 1,460 MW of capacity to residential and commercial DR programs in North America.
As both established and developing countries adopt electricity market structures and rules to make the grid more energy-efficient rather than energy-intense, greater opportunities for V2G business models and technologies will emerge, Navigant suggests.
Additionally, increased percentages of intermittent wind and solar power will create greater demand for energy storage to optimize the integration of these resources and balance frequency disturbances created from their variability in generation. The California PUC, for example, has just finalized the energy storage requirements for the state’s utilities to that end. (Earlier post.)
The Asia Pacific will be the fastest-growing region for V2G, Navigant says. Japan, South Korea, Australia, and China will begin to adopt electricity market rules and structures that will allow their growing PEV markets to help make regional and national grids more secure and efficient.
Despite the many benefits of using V2G technologies to supply ancillary services markets, there are challenges that PEV owners must overcome. Primary among the challenges is the structure of the local electricity market. Deregulated markets are the most near-term accessible test beds and launch points for ancillary services market participation. In contrast, regulated markets governed by vertically integrated utilities provide ancillary services internally and therefore may have limited access for independent power producers, energy service companies, or fleets, seeking to test V2G business models. Even in deregulated markets, though, the ancillary services market may not be profitable if market rules prevent the adequate compensation of fast-responding resources for the level of service they provide, or have high power capacity thresholds that require significant, and possibly prohibitive, upfront investments in vehicles and equipment.—“Vehicle to Grid Technologies”
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