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Last updated 2024.02.29
(I have been providing this core message since 2005. I update it occasionally to try to keep it current and relevant. A thank you to the Electric Vehicle Council of Ottawa for asking me to present at their February 2024 meeting, which led me to update this item.)

Why Vehicle to Grid (V2G) Will Never See Mass Adoption in North America

Darryl McMahon

Introduction

The EV, EVSE and electrical utilities, along with a group of ardent and vocal supporters, argue continuously that V2G is the killer app for EVs. I know, I was part of such discussions as early as 2001. What I have learned and concluded is that widespread use of Vehicle to Grid (V2G) is very unlikely to happen in North America – ever. I lay out my case below.

N.B.: I have long argued that EVs ARE the killer app for the smart grid, but not in the form of V2G. The distinction is important.

Terminology

Because the case for “Vehicle to Grid” is superficial and the reality is complicated, a lexicon of jargon has sprung up to confound the unwary. I’m going to review a few terms that get thrown around, but for this short overview treatment, not the details from the fields of law, engineering, product design, and finance / economics.

V1G

This isn’t actually a cute initialism for any real words. It’s a double-entendre on V2G, where the ‘2’ has been given a new meaning of 2-way electrical flow, rather than just substituting for the word ‘to’. So V1G just means a vehicle connected to the grid for charging, but not supplying power to the grid, and where the grid operator gets to play games with the electricity supply to optimize loading for the utility’s purposes. It can also be called smart charging, or behind-the-meter controlled charging. It has real advantages for utilities with varying power demands over the course of the day, especially if there is low demand in the middle of the night. I had the privilege of working on a funding proposal for a unique and flexible system for intelligently charging multiple EVs simultaneously and regulating power supply based on vehicle demand and current grid supply conditions. I was a big fan for this approach, and still am. It's a shame that project did not move forward after grant funding was approved.

V2B (Vehicle to Building)

This is essentially the same physical set-up as V2H, but the vehicle owner may not be responsible for the electricity bill of the building. In this case, how will compensation for the electricity be calculated and compensated?

V2G (Vehicle to Grid)

This is the utopian general case for using any EV to supply power to the grid at any connection point with any electric distribution company. Note the requirement for universality. The key to this scenario working is that EVs will be connected to the grid and available to supply power to the grid at times of very high demand. Electric utilities are expected to have supply capacity in place to meet typical daily maximum demand, plus a buffer, plus the ability to curtail supply to certain customers, plus the ability to obtain capacity from interconnected jurisdictions in extreme circumstances. The local utility is unlikely to turn to V2G until they are past utilizing all these options and still need more supply.

V2H (Vehicle to House)

This has real potential for people who need a stand-by generator due to frequent power disruptions. Nissan did provide an optional unit which allowed a Leaf to supply 240-volts to a building, for roughly US$2,000. That’s comparable to installing a robust generator with enough capacity to power a house. It avoids the complication of dealing with the utility for connection privileges to supply power, and has the potential to power the house in non-emergency situations at times of high electricity prices, which makes the economics more attractive than V2G, while also providing the comfort of knowing back-up power is available for the house when needed.

V2L (Vehicle to Load)

This one is a real thing, and has been for years. I did this in the 1980s from my EVs, such as jump-starting gas cars on really cold days. Even some early hybrid pickup trucks supported V2L with AC outlets in the vehicle (sometimes called a Contractors Edition). It solves a real problem (worksite power or mobile power) and can replace separate generators. It does not bring the issue of the vehicle owner bearing the cost not being the beneficiary of the supplied electricity, which is where we get to the complexities of payment.

V2X (Vehicle to indeterminate electricity sink – or all the above)

I don’t like this one, as it allows the V2G promoters to confuse the applications of taking power from the EV on-board storage as though it’s only a matter of running a power cord and ignoring issues which are not directly about electricity flow.

Regulatory Environment

Suppose we have a vehicle equipped so that it can supply 120 or 240 volts AC to an external load (V2L - like the Hyundai Ioniq 5 can), having inverted the DC power from the internal traction battery, and is able to synchronize with the local grid (which is on a 60 hertz sine wave), which the Ioniq 5 cannot do. This is no trivial assumption, and it will come with a cost premium on the vehicle.

In most North American jurisdictions, it is illegal to make such a V2G connection. It is called backfeeding. If the grid is up, the potential for unsynchronized AC supply is simply not acceptable to the utilities. If the grid is down, backfeeding presents a safety hazard to workers who are trying to restore the grid supply network. This is why houses with generators set-up to take over when there is a grid outage are REQUIRED to have a transfer switch to completely isolate the house wiring from the grid when the generator is connected.

Regulatory barriers are the key reason why V2G won’t be allowed to happen at just any 120-volt or 240-volt plug, though this is not the only issue with ‘plug-in-anywhere V2G’.

Technology

There are no Level 2 V2G EVSEs on the market today (February 2024) (The Ford F150 Lightning V2H package is not the same as V2G; defining scenarios correctly is important.) KWh-based metering is not permitted in most jurisdictions for EV charging (though it could come), let alone for measuring power in the reverse direction, which would likely have to take into account Time-of-Use (TOU or interval) pricing.

Electric utilities are quickly adopting large batteries on their networks for a variety of reasons:

Those are reasons utilities are already buying big grid-support batteries, before V2G is even a real product. Grid-connected batteries also have another huge advantage over EVs as a power source – they don’t get stuck in traffic at electricity demand rush-hour. They also don’t cause a potential backfeeding problem, or require massive investments in upgrading electricity connection points to deal with intelligent, data-logging, metered 2-way power flow.

So far, EVs don’t come with the ability to meter and record how much electricity they provide to an external load. Without that, the EV owner has no way to report how much electricity they supplied to the V2G customer (utility). The owner may also want the ability to control how much their battery can be discharged (e.g. not below 60%) or what their minimum price is to want to sell that electricity. Those functions are not yet available in EVs, and a data-logging power-metering function sufficiently accurate and robust for financial purposes will definitely add a cost to the vehicles.

If and when that functionality does arrive, it will have to include clock synchronization between the grid’s clock and the vehicle’s clock, to a sub-second level of accuracy for financial reconciliation purposes. This is because utilities will set start and end times for accepting the power from vehicles (will only happen in critical conditions), and because prices will likely change at interval pricing change-point times. To date, the charging signal protocols do not provide time-of-day data. If they do in the future, will vehicle owners accept the grid changing the time on their vehicle’s internal clock? That would be unhelpful for someone who crosses a time-zone boundary.

Most EVs made today (2024) do not come stock with the ability to provide AC electricity to an external load.

Some homeowners also recognize some of the benefits of battery storage, and are installing home battery (HB) systems (e.g. Tesla PowerWall). Those batteries are a better option for utilities to harness than EVs, because these batteries are stationary and homeowners might be prepared to offer more of their capacity at times of peak demand (not at times of major outages). These batteries can also store household energy production from solar panels, small wind generation, stand-by generators, etc. Being stationary, these batteries have a known address for billing and revenue purposes, is known to the utility as a potential live power point (backfeeding risk), and the power flow is already metered by the utility.

Plug-in hybrids could conceivably opt into a V2G arrangement. However, if the power draw is significant, the fossil fuel engine may be called on to keep the vehicle battery charged. From an environmental and health perspective (e.g. vehicle parked indoors), is this a desirable scenario? Is it a good financial option for the vehicle owner paying for the liquid fuel? How is available energy capacity in the vehicle to be measured when it is a mix of battery charge and fuel in the tank?

Given the need for vehicles and the grid to communicate, there will be protocols (simple as possible) and data exchange, likely via queries. This opens the door to a possible cyber-attack on the grid from malware installed on the vehicle, and there is plenty of evidence that Internet of Things (IoT) protocols are historically designed to favour simplicity over security and are used to crack devices and databases. That’s a big risk for a utility, given the low off-setting potential reward.

Related breaking news - 2024.03.12: How EV Charger Hacking Threatens Personal Data and the Power Grid

In short, the cars aren’t ready, the EVSEs aren’t ready, the utility connection points aren’t ready, the utilities aren’t ready, and there are better and easier distributed storage options to tap. That’s a lot of inertia to overcome.

Reality – How EVs Actually Get Used

I feel qualified to speak to this topic as I have built, refitted, converted and used road (and off-road) EVs since 1979, typically as daily drivers for commuting, running local errands, and occasionally for inter-city travel. I know what they can do, and have done it for decades.

Most EVs (due to the perception of limited range, and because short trips are the great majority of road vehicle missions) are used for commuting and errand-running. This means they typically spend about half their on-road time at the start or end of the ‘work-day’. For many, this means 30-60 minutes on the road in the 5:00 to 7:30 p.m. window, when the daily electricity demand is typically at its peak. In other words, at the time the electric utility is most likely to make the call for that power from an EV, the EV has a high probability of being stuck in traffic and unavailable to provide that power.

Most privately owned EVs do most of their charging at night when the vehicles are parked for 8 hours or more, the owners are sleeping, and electricity rates (Time-of-Use pricing) are lower. While there is a lot of hype over the installation of high (50 kW) and very high (up to 350 kW) charging stations, the reality remains that about 80% of EV charging is done at home at night (much cheaper electricity), despite the hype around satisfying the gas-and-go mindset of many drivers who have never known anything else.

Financial & Economic

The supposed reason that utilities want V2G is that batteries are very expensive, so better to let vehicle owners pay for the batteries, and just rent the service very infrequently. However, the battery prices (per kWh of storage) continue to fall at almost a Moore’s Law rate.

People who own batteries, in EVs or not, understand that they degrade with time and use. If they are going to put extra cycles or deeper discharges on their batteries to support V2G, they will expect some compensation for that, on top of repayment for the electricity they already paid for to charge the batteries. So far, the pricing models are not very attractive for EV owners, especially if the call for supply only comes a few days a year, and without a full day’s notice. (Some EV owners choose not to recharge their battery to 'full' on a daily basis in hopes of extending battery life. Knowing a day in advance of a need to supply power to the grid could entice them to put more charge on their battery in order to have the additional capacity to supply to the grid when needed.)

Utilities can buy batteries a lot cheaper than EV owners on a price per kWh basis due to the ability to use heavier technologies than are appropriate for EVs (e.g. flow batteries), economies of scale, and the utilities have a much stronger ability to use the batteries to capacity on a regular basis to maximize return on investment.

Finally, there is a financial reporting problem that nobody else is talking about: reconciliation and billing. If the vehicle owner sells 10 kWh of electricity to the utility in response to a 2-hour call for supply (worth about $2 to $3 at peak demand prices) while plugged in at a parking lot where they work, how will they be able prove they provided that power? How will they submit a bill to the utility for that electricity? Why will the utility believe their claim? Who is going to make the big investments across the whole local utility grid to accommodate this supply which could appear at any outlet? Suppose there are 10 calls for supply in a year, and the typical power supply sale from an EV is $4. Who is going to make any investment for a possible $40 annual gross revenue? If the car is parked at home at the time of the rare utility call for power, will the EV owner be satisfied with a simple net-metering price, which does not cover the cost of battery depreciation, only the price of the electricity?

I have a solid sense of how complex this kind of inter-party reconciliation, financial records data exchange (separate from and parallel to the physical charging control communications), billing and payment processing is, as I was a key team member in building two such systems for the Canadian telecom sector. Don't forget the implications of time-of-use pricing, surge pricing associated with an electricity shortage emergency, and ugly details like daylight savings time changes and time-zones in specific cases which will need to be accommodated. Y2K was easy by comparison. I know, because I did both.

The economic justification for V2G just isn’t there. That’s why it’s not coming to an EV near you anytime soon, or ever.

For the Win: H2G + S2H + HB (V2H optional)

Because intialisms are so much fun for the V2G crowd, I figured I would make up a few more so they can understand a more likely path forward, and because it's more viable, it will be the end for V2G. (I will supply the rest of this topic when I get an email from anyone asking for it to be published.)

Electric vehicles are in the news! Mass media outlets are breathless about this exciting new technology, completely without any context, such as the fact that EVs are not a new technology. EVs date back to at least the 1830s (see our EV History pages for the Web's most comprehensive treatment of EV History). If you would prefer a more balanced view of EV happenings from an EVeteran, then check out the EV blog regularly.

For climate change coverage, check out the 10n10.ca blog and website

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