Using EVs to Provide Grid Electric Services: Regulatory Challenges

Publication Type:

Compte Rendu / Report

Source:

Report on Gerpisa seminar, Virtual (2022)

Notes:

Yannick Perez, CentraleSupélec

Full Text:

The question of electrification can be asked differently, not only from the point of view of the production of electric vehicles (EVs), but from the point of view of the electricity distribution network.

There is an increasing need for decarbonisation of the transport and mobility sector. This requires a transition to EVs and regulations are moving in this direction, with political and governmental commitments to move towards decarbonisation. More and more manufacturers are moving in this direction, with two incentives: subsidies and fines.

The road to electrification is therefore well and truly underway. In addition, batteries are becoming more and more efficient, and manufacturers want to put more and more power into the batteries in order to satisfy mobility needs. There are two types of mobility: daily mobility (20 km/day) and exceptional mobility (800 km, once a year). This corresponds to two types of vehicle. However, it can be seen that the batteries are too large for daily needs.
For daily mobility needs in France, the 50/60 Kw/hour EV is perfect, but for long distances, very large batteries are needed. Added to this is the fact that on motorways, a specific recharging system is needed, with a significant spread of recharging infrastructures.
This raises the question of whether the batteries are too large. In addition, there is also the problem of peak energy consumption, where all households would recharge their cars at the same time. Would there be players willing to buy the flexibility offered by the energy stored in these cars? How could this be done? Who needs flexible electricity?

So we are going to build an energy offer, where we will offer services of millions of Kw/hour, thanks to EVs and the energy stored in their batteries. The remuneration is not known in advance, it will depend on the supply and demand of energy. Clear and transparent market rules are needed in a sector where there are many players.
Other conditions must be met. For an EV owner to be paid for the energy stored in his vehicle, he has to be connected to a charging station. For there to be communication between the EV and the charging station, the manufacturer of the EV must allow it. A whole bunch of rules are needed to make the electricity in EVs available.

There are several problems. The regulations don't exist yet, because by definition, new technologies and their uses precede the standards that govern them. What state are the distribution networks in? There is also a problem of barriers to entry into the European market. Distribution networks are a source of revenue, but we are not yet very good at turning this potential into concrete revenue.

Isn't there another way to make this system work, until the regulations change? Tesla advocates "smart roofs", i.e. tiles that function like photovoltaic panels. This would allow the user to avoid paying energy taxes.
Who ultimately benefits from EVs? That will depend on government decisions, which are country-specific, and on the economic logic behind these regulations. Finally, it should be noted that regulations are very slow to be put in place. The idea of an EV connected to an electrical distribution network was first formulated in a research article in 1996. It was only in February 2022 that a company acquired the rights to set up a distribution system in France.  

Discussion :

Question: Gerpisa has been working on the EV for a long time, always with a lot of scepticism. We are finally seeing the shape it could take. But, as you point out, there is still a lot of uncertainty, particularly in terms of prices and remuneration. Which intermediaries will enter the market? Who are they? How can we be sure that an Uber is not picking up the slack in this sector?

Answer: In energy, we are in European markets. The European market is not perfectly integrated, but it is integrated. A breakdown in one country has an effect on the others. So the uncertainties are very great.
Yes, the question that arises is how the energy distribution ecosystem should be structured. Because there is a risk that one intermediary will capture most of the value in this market, and that it will not be the manufacturers or the consumers.
We can be pessimistic, because time is long. In ten years, we have only seen one market emerge on this issue. The objective is to unlock the frequency control market, which is the most complex. There are pockets of slowdown, of slow diffusion, and this is also because the technology is new. The meeting between a very dynamic universe and a very conservative universe, that of the networks, means that things are moving slowly. In the middle, the manufacturers, whose aim is medium-term profitability, are in between.

Question: Isn't there a question of marginal cost of production here too?

Answer: Prices at night are lower than during the day. You then draw electricity during the day. This works if there is a large day/night differential. Other plans are possible: recharging at work, in supermarkets, etc. But this cannot be generalised, it is not a sustainable solution.

Question: Is self-consumption viable, as proposed by Tesla and the "smart roofs", or is it just buzz? Have there been any studies on the profitability of self-consumption? What would encourage car manufacturers to invest in this field?
The LOM law passed in December 2019 obliged fleet managers to green their vehicles, it is a cost for them. But the same law allowed them to do B2G to offset these costs. Will they be able to do so? Or is it too early to tell?

Answer: there is no need for regulation to impose business to grid. Manufacturers understand that if they don't put this equipment in place, they won't sell vehicles.
The main cost of vehicle-to-grid (V2G) is the charging station, because bi-directional charging stations have to be implemented. The costs are finally starting to come down. It's too early to tell if V2G is a way for them to get their way and offset the cost of greening for mobility operators/fleet managers. If you're a fleet manager, you're big enough to address this issue. But there is a significant project development cost, but not too significant.

There are different types of entrepreneurs. The scientists are academic entrepreneurs. This has turned into an economic project that since 2010 is developing. The electricity networks are driven by the academic world. At the level of buildings, the network is too fragmented for there to be a service where a vehicle is sold integrated into a house. Even if Bouygues, which is investing in 'smart homes', is not. In B2G, Tesla said until recently that they were not interested. But they sell batteries, so they are trading energy.

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