There are approximately 20.1 million registered motor vehicles on Australian roads, with the transport sector accounting for almost 18 per cent of Australia’s greenhouse gas emissions.
Curbing transport emissions is a leading driver towards mitigating climate change, and it was promising to see the NSW government recently take a step in the right direction by introducing subsidies and funding towards charging infrastructure, to encourage electric vehicle uptake.
However, at a federal level, there is no doubt Australia is lagging compared to leading nations on EV incentivisation through policy. While rebates and tax credits get all the press, make no mistake that it is the ‘stick’ and not the ‘carrot’ that incentivises EV uptake in the leading markets.
Namely the strict carbon emissions targets that auto manufacturers must meet or face severe penalties. This equates to thousands in ‘credits’ per car sold for these manufacturers. Even if Australia were to come out with a world leading EV adoption scheme, the vehicles would not appear on our shores unless it was accompanied by something close to the emissions targets put in place in other markets.
Otherwise it simply isn’t lucrative enough for Original Equipment Manufacturers (OEMs) to dedicate enough stock to our small market.
In saying that, while the vehicle emissions benefits of EVs are clear, Australians are less aware of the value that electric vehicles can bring to the whole energy system, via bi-directional and vehicle-to-grid (V2G) charging. There are two dimensions when it comes to tapping the benefits of bi-directional charging – the end customer, and fleet (or virtual fleet).
At a consumer level, bi-directional charging technology allows owners to use their EV battery to power their home (V2H charging) as well as send energy back to the grid when the vehicle is parked. On a larger scale, companies, and entities such as shopping centres and airports, can aggregate electrons from a range of vehicles (i.e. fleets) and use the power for commercial purposes.
For the end customer, the use case for V2G charging is simple – there are many perks to having a large battery on wheels. Japan is already trialling technology that allows EV owners to use the electrons in their cars to pay for parking.
Extending this, it is also conceivable for them to pay for coffee at a local café with electrons from their car. Of course, EV owners can also charge the vehicle, ideally for free or at a low cost, at any given location and then send it back to the grid or use it to power their homes directly – a great energy arbitrage opportunity.
But fleets are where it gets interesting. The electrons generated from an EV fleet creates the scale to tap into flexibility markets, such as FCAS, by creating a Virtual Power Plant (VPP) out of the fleet, likely in partnership with a utilities company or other market savvy participants.
This adds an immense amount of value, not to mention commercial opportunity, to the entire energy ecosystem when done right.
Utilities companies can use EV charging to balance supply and demand and optimise grid performance in a similar way as wind or solar energy sources. By creating a more flexible grid that accommodates EVs and V2G technology, utilities companies would be able to better manage network congestion, reduce grid stabilisation costs and optimise wholesale/retail portfolio spend.
While consumer attitudes towards EVs are becoming more positive, the economic benefits from the widespread adoption of EVs and V2G technology, are still constrained by rigorous controls and standards set by Australian regulators.
We have seen this with the certification of V2G chargers, which has already impacted at least one of the V2G trials in Australia. While not suggesting a free-for-all approach to the detriment of system stability and customer safety in Australia, the reality is that the technology in question is already in use in Europe.
Bi-directional charging can be a game changer in terms of energy storage, grid stability and EV adoption, with the ability to provide value to all layers in the ecosystem as well as help move the dial on climate change (assuming the energy source is renewable and there are ultimately fewer vehicles on the road).
Beyond the technology itself, mass adoption in Australia hinges on customer experience and increased awareness of the full potential that EVs have to offer – not just on the road, but as individual, decentralised power plants.
This is in addition to new commercial opportunities, which will inevitably be conceived as the number of EV with bi-directional charging capability grows.
If one examines the fastest growing value pools in the world, they are typically centred on enhanced utilisation and/or sharing of assets and combining several complementary technologies. Whether it is accommodation, transport, or servers; tremendous market opportunities have been created by taking idle assets and putting them to work.
For over a century now, the automobile has been a spectacularly under-utilised asset and now is the time for that to change.
With digital transformation and decarbonisation initiatives rapidly taking shape around the world, there is an urgent need for a revision of Australian regulation to become more aligned with the times and Australia’s economic progression.
V2G technology is a watershed moment in the energy and EV transition, and one that Australia simply cannot afford to miss.
Charlie Richardson and Soon Wai Lim are eMobility Practice Leads at Accenture Australia & New Zealand.