Analysis of a vehicle-to-grid (V2G) pilot in Australia found that fleet operators stand to earn an equivalent of C$10,700 per EV annually by helping to maintain grid frequency in one of the country’s wholesale electricity markets.
Using V2G to help a grid balance electricity supply and demand “has the potential to become a lucrative and cost-effective way for vehicle fleet owners to subsidize incorporation of EVs into their fleets,” finds the Energeia report, prepared for the Australian Renewable Energy Agency (ARENA).
The report offers insights from a pilot V2G energy transfer program for Australia’s National Electricity Market (NEM), which spans five regions along the eastern coast to facilitate electricity generation, distribution, and trade.
The NEM contributes 80% of Australia’s annual power generation—200 terawatt hours—and like other grids, it needs its load and generation balanced to maintain the system’s frequency. The Australia Energy Market Operator (AEMO) does this by quickly injecting or reducing energy in the grid to match drops or rises in supply or demand. These services go by many names, but the AEMO calls them Frequency Control Ancillary Services (FCAS). Coal or gas plants historically helped deliver FCAS, but other sources like wind farms are now increasingly being considered.
The pilot explored how EVs could provide FCAS and what economic benefits they could bring to EV owners. Participants included 51 Nissan Leaf vehicles using 51 bidirectional Wallbox Quasar chargers across 11 buildings (though data was only available for 38 total chargers, 29 of which enabled extraction of discharge data). The EV chargers were connected to a grid simulator, with FCAS requests coming from a controller that signaled for EVs to either consume energy by charging (FCAS lower), or to supply energy back to the grid (FCAS raise) when demand was high.
“The AEMO sets a target for FCAS capacity in each market, and registered generators and loads can bid into them,” explains the report. “AEMO selects the lowest-priced bids first to meet the capacity target, and then uses the marginal price to set the price for the market.”
With EVs bidding in for raise or lower services, their participation would reduce demand on fossil fuel generators if they were the alternative, the report concludes.
The EVs bid into the NEM’s 10 FCAS markets categorized as either “regulation” or “contingency” markets. Regulation markets address minor changes in frequency, while contingency markets cover major drops or rises with either one-second, six-second, 60-second, or five-minute response times.
Contingency markets are ideal for FCAS from EVs because they require dispatching electricity less frequently than regulation markets. For the pilot, EV owners participated solely in the 60-second and five-minute raise and lower markets. They did not participate in regulation markets because the required frequency of charging and discharging could harm batteries, but analysts projected revenue for the omitted markets from the study’s charging data and used corresponding prices in the 2022 New South Wales markets.
Overall, FCAS lower prices were significantly less than the FCAS raise prices, since FCAS raise services are more complex and costly to operate than FCAS lower services, says the report. “The reason is that FCAS raise requires generators to turn on and have extra resources on standby, whereas FCAS lower does not require any standby resources and can be activated by simply turning on a load.”
An average vehicle could earn an upper limit of around A$12,000 (C$10,700) participating in the FCAS raise regulation market, the report says. It would earn roughly A$2,600 (C$2,300) in the FCAS raise 60-second contingency, around A$9,000 (C$8,000) in the FCAS lower regulation market, and A$2,000 (C$1,780) from participating in the FCAS lower 60-second contingency market.
Despite these promising results, the report notes some drawbacks, most notably that consistent participation may result in premature battery degradation. A greater number of EV owners participating in these markets could also drive down bidding prices and reduce the economic incentive to participate.
