The term VGI refers to a suite of hardware and software technologies that enable plug-in electric vehicles (PEVs) to participate in grid services such as the ancillary services markets (typically frequency regulation), demand response (DR) programs, and/or the operation of microgrids. The VGI market can be separated into two categories, according to the report: PEVs can provide services to the grid by changing the rate at which they consume power, which is known as vehicle-to-grid communications for charge management, or V1G. Or they can provide power back to the grid, a bidirectional system known as vehicle-to-grid power transfer, orV2G. While V2G pilots have taken center stage, to date, V1G pilots have fewer barriers in regards to automaker adoption and accessible markets.
By participating in grid-balancing services such as frequency regulation or DR, PEVs can accrue revenue and increase the return on investment of the vehicle to the owner. While V2G-enabled PEVs can be used for vehicle-to-building (V2B), vehicle-to-home (V2H), and vehicle-to-infrastructure (V2I) applications, integrating these technologies within PEVs provides greater energy cost savings and emergency power generation. The market drivers, challenges, and opportunities for these applications differ significantly from those for VGI, Navigant noted, and were not covered in detail in the VGI forecast.
The initial entrants to near-term markets for VGI will be energy aggregators and major fleets, Navigant said. Aggregators will include VGI-enabled fleets within energy generation portfolios to access markets with the highest returns. These aggregators will initially rely on fleets interested in converting end-of-life vehicles to PEVs, Navigant suggested.
Such fleets will be able to leverage the capital necessary to place significant power capacities into local grid service areas. Successful demonstrations will engender greater investments in VGI technologies and prompt aggregators to create opportunities for individually owned PEVs to supplement existing energy generation portfolios.
Navigant Research estimates that the number of PEVs in use globally represents a load of nearly 4.8 GW in 2015. By 2024, PEVs are expected to represent 55.2 GW. A little over 4% of that load in 2015 is estimated to be incorporated into VGI services. By 2024, over 7% of the global load is expected to be in VGI services, with a vast majority enrolled in US VGI programs.
V1G accounts for the majority of capacity incorporated in VGI. However, V1G capacity is limited in its ability to provide power once the PEV has completed its charge. V2G capacity, while only representing 2%–5% of VGI capacity from 2015 to 2024, is not limited by battery SOC and is therefore more available for grid services and revenue-generating opportunities.
Navigant sees North America as the strongest initial market opportunity for PEVs providing grid services. Japan and Western Europe will follow slowly as both PEV markets emerge and electricity market rules and structures are developed to allow the vehicles to help make regional and national grids more secure and efficient. North American grid operators and utilities will set examples for other world markets on market rule development for PEV participation in ancillary services markets and DR programs.
Navigant expects PEVs participating in VGI services to provide nearly 4.2 GW of power to grids globally by 2024 under an aggressive scenario. Of that capacity, 121 MW–221 MW is expected to be V2G capacity, depending on whether energy aggregators are able to incorporate individually owned vehicles into V2G programs.