First vehicle-to-grid tariff in the UK will save drivers $1,640 per year

Australia is still developing rules & regs for bidirectional charging, but the UK is pushing ahead with new tariffs that will unlock massive amounts of battery storage in EVs.

Octopus Energy, partly owned by Australia’s Origin Energy, has launched the UK’s first vehicle-to-grid tariff, offering free charging for EVs if the customer allows the energy provider to utilise their vehicle’s battery to export electricity back to the grid during peak demand hours.

The company says the new smart tariff will save EV owners more than £850 ($A1640) a year in charging costs.

To qualify for the tariff, customers must have their EV plugged into the grid for 170+ hours each month (about 6 hours per day) and stay below the annual usage limit of 333kWh per month, which Octopus says represents about 12,000 miles (19,000 km) of annual driving.

For reference the average Australian passenger vehicle drives just 11,100km per year.

Octopus says its smart tariff platform, Kraken uses advanced data and machine learning to enable the new vehicle-to-grid tariff. The company says the platform has been licensed to support over 50 million accounts worldwide, including Origin Energy, which recently increased its holding in Octopus to 23%.

The new V2G tariff marks a milestone in the transition to clean technology and could be the key to unlocking massive amounts of battery storage, enabling a further acceleration away from fossil fuels.

It may also be coming to Australia, in time, with Origin already trialling different EV charging tariffs that have been successful in pushing demand to the midday sun, or low demand periods overnight.

New battery lifecycles enabling vehicle-to-grid

One of the main concerns with vehicle-to-grid in the past was that the additional charging cycles could accelerate battery degradation which aside from reducing EV lifespan also plays into negative misinformation campaigns around EVs, a potential reason why many EV makers have so far been reluctant to provide the hardware in their vehicles.

However, with the recent rapid improvements in EV battery lifespan and with smart V2G tariff platforms now reaching commercialisation, we may be about to see the technology convergence that enables a mass uptake of V2G.

A 2018 Model S recently clocked over 650,000 km with the same battery and CATL now provides 800,000 km warranties on its EV batteries. Last year Gotion High-Tech announced it would begin production of a battery with a lifespan of 2 million km which represents 130 years worth of average Australian driving.

What this means is that battery longevity is now at a point where EV batteries can absolutely be utilised for vehicle-to-grid applications without worrying about battery degradation.

And with most modern EV batteries now 50 kWh or more (roughly 4 times the capacity of a 13.5 kWh Tesla Powerwall), there is an enormous opportunity to unlock a massive energy storage resource in the form of millions of EV batteries, the utilisation of which would be a complete game changer for renewables rollout and grid stability.

Australian vehicle-to-grid expert says research shows even greater benefits are possible

Dr Björn Sturmberg, who is the research leader of ANU’s Battery Storage and Grid Integration Program says vehicle-to-grid offers multifaceted solutions to Australia’s energy woes including reduced prices and increased grid resilience. Sturmberg thinks EV owners can get an even better deal than free charging when it comes to V2G.

“The opportunities for V2G to generate revenue in Australia are significant, due in no small part to the volatility of an electricity market with concentrated market power and aging fossil fuel generators as illustrated earlier this week in Victoria.” said Sturmberg.

On Wednesday after storms in Victoria cut transmission lines leaving 500,000 households without power, wholesale electricity prices spiked as high as $16,600/MWh.

While thousands were left without electricity, those lucky enough to already have home battery systems with export tariffs were making the most of the high prices, selling their stored energy back to the grid for top dollar.

Sturmberg thinks that V2G has the potential to provide a lot more financial benefit than free charging to EV owners.

Our research shows that the potential income from V2G will in many cases far exceed the cost of EV charging, meaning drivers ought to receive more than just free charging.”

He also believes EV owners should be incentivised to keep their vehicles connected as much as possible.

“For the grid – and thereby for the reliability and affordability of all Australian’s electricity supply – the most important aspect of EV usage is that EVs are plugged in to chargers (or a regular power outlet) as often as possible,” he says.

“This provides the greatest flexibility in their charging, to reduce the cost of electricity generation as well as, critically, the costs of network maintenance and emissions. This requires a shift in drivers’ behaviours, to habitually plug in their EVs whenever parked.”

Sturmberg says he wants to see innovation and trials of tariffs that provide incentives for every minute that EVs are plugged in and available for managed (‘smart’) charging and says this has the potential to be very effective even before including V2G.

On the impacts of V2G to EV battery life Stumberg thinks provided systems are well managed, there’s no need for concerns around battery degradation.

“The impact of V2G (and driving) on batteries is primarily determined by the state of charge of the battery and the rate at which power is injected or drawn out of the battery,” says Sturmberg.

“Well managed V2G, that keeps the state of charge of vehicles within batteries’ comfort zone (generally 30-80%), will have a very modest impact – and in some studies has been shown to improve battery health compared to unmanaged charging by reducing the amount of time that batteries are at a very high state of charge.”

Daniel Bleakley
February 25, 2024
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