EV virtual power plants could provide support in times of peak demand

One incentive for buying an electric vehicle is the potential to make money by charging or discharging at certain times. This seemingly simple task for EV owners could create a more resilient grid and reduce the need for additional power plants as U.S. roads see more EVs.

A physical power plant is easy to visualize — smokestacks, transmission lines, concrete cylinder buildings. A virtual power plant, generated in part by EV owners, is more of a dot map. It’s an aggregation of energy resources to produce energy equivalent to that of a physical power plant.

Orchestrated together, thousands of EVs and household electronics “can act just like a large-scale power plant and provide the same kinds of services to the grid as large-scale power plants we’re familiar with can provide,” said Mark Dyson, a managing director with the carbon-free electricity program at RMI, a nonprofit focused on accelerating the global energy transformation.

The idea behind a virtual power plant consists of pooling together neighboring distributed energy resources, such as EVs, to create a grid power source. The cars charge up at off-peak times, storing electrons that can be routed back to the grid during electricity demand spikes.

EV owners could profit via an arbitrage. They purchase electricity at low off-peak rates and sell it back at peak times, when rates are the highest. RMI, automakers and the Department of Energy all told Automotive News they see this as a major consumer incentive.

“Their vehicle is making money for them while they are not driving it,” said Dave McCreadie, EV-grid integration strategy and business development lead at Ford Motor Co.

RMI announced a virtual power plant coalition this month called the Virtual Power Plant Partnership. Members include automakers General Motors and Ford, smart home company Google Nest, and energy and solar companies OhmConnect, Olivine, SPAN, SunPower, Sunrun, SwitchDin and Virtual Peaker. GM and Google Nest provided initial funding.

The group’s goal is to educate EV owners, policymakers and energy market leaders on the benefit and function of virtual power plants and bidirectional charging, or moving electricity back and forth from EVs and other battery devices. The coalition will share ideas and best practices for using virtual power plants to create a more resilient power grid.

“It’s critically important to really educate a lot of folks — whether it’s policymakers, legislators, an end-customer on the value that this can bring,” said Rob Threlkeld, director of global energy strategy at GM.

Typically, regulators focus on utility rates, but “this is another asset that they can potentially leverage as providing value to the customer,” he said.

EV owners tend to plug in vehicles for an average of 11 hours, but only about two hours of that is actually charging, said Jigar Shah, director at the loan programs office for the U.S. Department of Energy.

Customers don’t care whether their vehicle charges in the first two hours, last two hours or somewhere in between — as long as it’s recharged by the time they need to drive, he said.

“The question really here is, do they want to be compensated to be more flexible in the way in which their car charges?” said Shah.

When a city or neighborhood has many EVs to charge, the existing power system can be strained, he said.

“You can either spend $50 million upgrading the distribution system to be able to handle everybody wanting to charge at the exact same time … or they can agree to allow the charging [in] shifts so that the grid doesn’t have to be upgraded and therefore their electricity bill doesn’t have to go up,” Shah said.

For managed or bidirectional charging to create a virtual power plant, EV owners must participate.

Paul Waatti, manager of industry analysis at AutoPacific, said a lack of awareness among EV owners is the only obstacle. EV owners have a first-adopter mentality, so if they can benefit from managed or bidirectional charging, they will likely try it, he said.

Plus, said Waatti, consumers need to feel confident that the grid is ready. “Virtual power plants offer a solution to ease grid demand when it peaks,” he said.

Alexei Andreev, managing director at Autotech Ventures, worries about the degradation of consumers’ batteries through bidirectional charging, but he expects them to participate in managed charging if there is a financial incentive.

There is more promise for bidirectional charging on the commercial side — where cost savings can be more significant and fleet schedules are predictable, said Nathan Niese, global lead for EV and energy storage topics at Boston Consulting Group.

With managed charging, once customers have a smart charger in their garage and understand how to optimize charging, many will opt in, he said.

“As soon as you have the smart charger that allows you to manage the charging, you’re going to take advantage of that because that just makes the promise of EVs so much stronger,” Niese said. “It’s for your personal gain.”