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Hello Hyperdrive readers, its Ryan Fisher here to talk about BloombergNEFs latest research on the value of bi-directional, or vehicle-to-grid, charging — a capability that involves exporting electricity from a vehicle’s battery to a home, building or to the grid.
Hyundai and Nissan are just two of the major automakers offering bi-directional charging through their EVs. Others, including Ford with its F-150 Lightning pickup and Volkswagen with models from its MEB platform, will add the functionality in 2022. Even Tesla’s Elon Musk, who has been mostly silent about such a feature, said at the company’s September 2020 annual meeting that future vehicles would offer bi-directional charging, though he’s been largely silent about it since then — perhaps due to the potential cannibalization of the Tesla’s stationary storage business.
There are barriers to mass adoption of bi-directional charging, including the increased loss of battery life, the high cost of the chargers and equipment needed to enable it, and the ability to participate in grid service markets. Even so, many automakers are moving ahead with this capability while trying to figure out its potential to generate cash.
The feature is front and center in the advertising campaign for the fully electric Ford F-150 pickup truck – for over four decades, the best-selling vehicle in the U.S. It’s a smart hook to entice prospective customers, an offer of energy independence. Who would refuse that? Especially when blackouts have been rife across the U.S. over the past year in states like California and Texas, where the F-150 is a popular seller. Ford says the Lightning – which to date has 200,000 reservations, and is expected to start deliveries in spring 2022 – could power a home for three to 10 days when combined with the purchase of a Ford pro charger and an integration management system. To many consumers, that’s a better and cleaner option than running a diesel generator for that long.
If bi-directional charging was enabled for the entire global fleet of EVs, that would reduce the need for fossil fuel generation and help to manage peak energy demand on the grid. Fewer grid upgrades would be required and the potential pot of money going in to grid service markets that could be used instead to pay electric vehicle drivers for use of their vehicles battery.
Net annual costs and revenues by electric vehicle charging type for a 60kWh passenger electric vehicle in the U.K. Note: Octopus Energy agile tariff used from May 2020 to 2021. Costs of degradation from grid services are included, the 7kW bi-directional charger cost is excluded.
BloombergNEF analysis shows that drivers with a bi-directional charger in the U.K. can benefit by about $370 annually. Still, charger costs are prohibitive to drivers adopting the technology. A current bi-directional charger costs about $5,000 more than a uni-directional one — that would need to drop to about $1,850 for drivers to achieve payback in five years. Ford’s strategy of including much of the bi-directional functionality on the vehicle (called AC bi-directional charging) should lower the enabling charger cost.
The industry is grappling with the effects of battery degradation, which change depending on charging patterns, temperature, and quality of manufacturing. Due to this uncertainty consumers are rightfully hesitant to use their batteries outside of driving. But automakers don’t take multi-billion-dollar liability risks lightly and they are becoming increasingly comfortable with the feature. Data suggests the latest electric vehicles lose around 1.5-2% battery capacity a year. Assuming a target of 20% battery loss after ten years this could leave around 0.5% degradation a year for grid services.
By controlling the power and usage parameters of grid services, BloombergNEF analysis suggests they can be completed within a 0.5% a year degradation allowance. Some academics are even suggesting that the extra usage can help to decrease battery loss by conditioning the battery. There is certainly more to be learned about using electric vehicle batteries for multiple services. Automakers are, however, willing to build the plane while flying it to get a leap in selling electric cars and muscling in on energy services market.
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