Major car makers are rolling out V2G plans this year. Is Australia ready?

In the European Autumn of 2024, Renault plans to launch a vehicle-to-grid (V2G) offering for residential customers first in France and Germany, and then the UK. Think of it as a ‘series 1’ product offering that reflects the early stage of industry development, but that points to a belief shared by many European automakers: that V2G has mainstream market potential.

An annual V2G conference in Münster, Germany earlier this month heard from Renault, Volkswagen and BMW about the market readiness of their V2G technology and how they are approaching the challenges and opportunities presented by legacy regulatory frameworks, market incentives and consumer preferences.

These are the first movers, but over the next couple of years we expect at least 43 vehicles to come to market with similar capabilities.

So, what is on offer?

Firstly, why V2G?

Vehicle-to-X (V2X) is a set of capabilities that allows electric vehicles to export power to a home or building (V2H/B), to the grid (V2G) or directly to an electrical appliance (V2L). Working definitions of the technology in a report we prepared for ARENA in 2023. You can find that here.

The interest in V2G is driven by one fundamental reality: The potential economic value of the batteries inside our society’s growing EV fleet extends well beyond mobility applications. They have the potential to contribute to substantial cost reductions for vehicle owners and can help with the integration of renewable energy and particularly, rooftop solar PV.

The size of the opportunity is simply enormous. Our summary report for ARENA found that our EV fleet energy storage capacity will be larger that all our form of grid energy storage by the mid 2030’s and (conservatively) nearly four times the size of all the storage needed to balance renewables in Australia’s electricity markets by 2050.

The capital costs are also very low, potentially only 6% of the current costs of utility scale battery storage. This is made possible because EV batteries are designed to greatly exceed the mobility needs of most customers most of the time.

Much of this capacity will be idle and using it for other purposes has negligible (if any) short-term cost to the vehicle owner, and an increasingly minor impact on battery life. 

Accessing only 10% of this capacity could save Australian energy consumers $94 billion in avoided battery capex based on current pricing.

But what about battery life?

The potential impacts on battery life seem material but not critical: the Münster conference heard from Professor Dirk Sauer from RWHT Aachen University that 12kWh per day (2.48 MWh pa.) of grid support could use up 20% of a typical NMC battery’s 1.6 million km lifetime range.

Impacts to battery life are minimised by reducing deep or very fast discharges – a low risk for residential single-phase charging – and next generation batteries greatly reduce battery degradation associated with additional use.

Volkswagen outlined initial warranty conditions for its V2G offering included 2 MWh and 800 hours of discharge per year. Previous modelling we have conducted indicated an ‘economically efficient’ dispatch rate for an average Australian customer of closer to 8MWh pa., with each MWh worth just under $100 to a customer on a spot passthrough tariff.

So, while VW does not yet have an ideal proposition, this is a first-generation product, and we can expect future offerings to be more competitive. To date, Nissan has offered much more permissive terms.

The first movers

Nissan is of course the global pioneer of V2G market offerings, followed by Mitsubishi. These are the only two automakers with actual V2G deployments in Australia. Renault (also part of the RNM Alliance) will be next to market. 

Renault has opted for 11 kW AC bidirectional charging (instead of 7 kW DC used in Nissans and Mitsubishis), on top of V2L (up to 3.7 kW, a large offering in the European market). Like many carmakers pursuing an AC V2G approach, Renault expects that over time, a mass-produced onboard charger will bring down total installation costs and streamline consumer V2G access.

The Renault 5 E-Tech electric will come with a Mobilize Energy contract offered in partnership with The Mobility House. This will provide V2G customers with ‘guaranteed carbon-neutral energy’ to charge their vehicles, and a smart charging software application to reduce energy bills.

The Mobility House will trade vehicle capacity in local wholesale electricity markets and offer customers a fixed price electricity contract. Customers can also reduce their costs by plugging in the car more of the time.

This makes sense as the more the EV is plugged in, the greater the market revenue potential. The Mobility House thinks it can deliver customers ‘free charging’ although this is impacted by inefficient ‘double taxation’ treatment of customer imports and exports in Germany.

Giving Renault operational control means customers do not need to worry about burning their warranty, but it will limit their flexibility. 

Renault bases their application on the ISO 15118-20 standard which allows for rich communications between EVs and charging infrastructure, and which in future will provide true interoperability between EVs and charging infrastructure across brands.

Today however, the AC use case within this standard is less well-defined than DC V2G and non-standardised elements are needed to make the solution work (work is underway to address this).

The BMW i3 is the next cab off the rank in 2025 (a new-generation sedan differing from the previous i3 compact car) with an 11 kW DC bidirectional offering coupled with a Kostal Wallbox.

Once again, V2G will initially only be available through a defined aggregation service and with specific off-board hardware, but BMW say they are committed to open standards like OCPP, ISO 15118-20 and EEBUS (for EMS and smart appliance integration).

This creates the possibility of mixable, plug & play technology configurations in the future. For Australia, swap EEBUSS with a protocol like Sunspec Modbus.

One of the impressive aspects of BMW-Kostal tech stack is the effective use of ISO 15118-20 ‘dynamic mode’ which can, under certain conditions, get them from 11kW charge to 11kW discharge in 250ms.

This is would fast enough participate in Australia’s new Very Fast contingency FCAS Market. If the car was enabled for 10kW of VF Raise, 3 hours per day during the evening peak, we estimate that’s worth up to $320 pa. based on recent pricing, on top of any intraday energy trading revenues. FCAS pricing is however very variable, and our markets could get saturated easily.

Volkswagen plans to enable 10kW DC V2G across all MEB platform vehicles including Skoda, Cupra and Audi. Initially, ID series vehicles in Germany can be hooked into an E3/DC ‘ecosystem’ incorporating solar inverter, wallbox charger and home energy management system for heat pump integration.

E3/DC is looking to merge these into a single hardware unit in the future. The initial offering is V2H, defined as no grid export, due largely to the ‘double taxation’ issue which devalues exports in Germany, and the German people’s apparent Wollust for backup power technology.

VW developed MEB platform before ISO 15118-20 settled, so they are currently working with adapted 15118-2 communications. They are transitioning to -20 in the future and are looking to adopt a non-discriminatory interoperability and access policy (i.e. a mixable, plug and play hardware stack).

Hyundai IONIQ 5’s have demonstrated AC V2G in public trials for some time now, implementing a similar (but not identical) adapted 15118-2 communications solution to Volkswagen. We Drive Solar has been trialling bidirectional public charging with IONIQs since 2022. In a new partnership with MyWheels, the largest car share operator in the Netherlands, 400 IONIQs will be deployed this year in Utrecht, followed by 500 in other cities in 2025. Interestingly, Hyundai is yet to announce an open market V2G offering.

Using V2G aligns with We Drive Solar’s goal of ‘making electric car sharing profitable, scalable and a solution for grid congestion’. In their model, the cars each have a dedicated charging location which addresses interoperability challenges.

Also in a car sharing network, this time in Switzerland, Sun2Wheel have 50 Honda E vehicles doing 10kW DC bidirectional charging. The smaller Honda E batteries lend themselves to frequency response and they are demonstrated to be capable of 1.5 second response times.

Even at this relatively early stage of V2G technology, the overall payback for bidirectional charging in the Sun2Wheel car sharing context is estimated at 7 to 14 years, and they have found no evidence of additional battery degradation.

The customer service wrap

V2G is technically complex and still suffers from a range of technology integration challenges. Even with the adoption of standards like ISO 15118-20, there are still areas of interpretation which are a barrier to a true ‘plug and play’ experience. CharIN, the industry group that champions CCS-based charging systems, is working on these as a priority so hopefully this situation will improve greatly in the coming years.

Automakers are addressing complexity by providing highly integrated product and service wraps that aim to minimise the number of stakeholders customers need to engage with and simplify the experience and value proposition. For now, this means partnering with a narrow set of off-board technology providers and electricity retailers (aggregators) that can translate the technology into financial returns. 

The concepts of ‘free charging’ and ’greener energy’ are viewed as intuitively attractive propositions for many customers, however the overall customer experience will also be shaped by:

• Total costs & benefits – Upfront costs will be high initially, until mass production brings these down, benefits are service and market specific
• Consumer visibility and control – all solutions will come with an app, and some have in-home display capability where users will be able to easily set their state-of-charge and other preferences
• Consumer confidence – regarding warranty terms and the lifecycle operation & maintenance requirements, and efficient customer-friendly issue escalation processes

There is already solid evidence that early adopters are willing to have smart charging automated as long there is a clear financial benefit, and their mobility needs are met but detailed data on mainstream preferences is not that accessible. V2G market offerings in Europe can provide rich data on revealed preferences, pleasure and pain points across a widening demographic over time. Hopefully this will be a theme in future conferences – today (in the public-domain at least) there are still may unknowns.

The Australian opportunity

Australia can look to Europe to understand the trajectory of V2G technologies and how these could benefit consumers and the grid.

However, I argue that the underlying value proposition for Australian consumers is much greater than in Europe due to our higher penetration of solar and our highly dynamic 5-minute energy prices which increase the value of automated intraday energy arbitrage.

Our FCAS markets are also relatively high value and accessible and dynamic operating envelopes will open up more capacity for customer exports during peak times. We have easy access to energy spot prices via for example, Amber retail contracts but a missing piece of our future smart grid puzzle is dynamic network pricing which we explored in this recent report. 

We often complain in Australia about grid connections issues, but we actually have it pretty good compared to Europe. Once updated in mid-2024, our national grid code (AS/NZ 4777.2) will allow OEMs to get certified for the whole country in one go with minimal additional local requirements.

There is a lot more work to do however defining the test suite specification for Australian smart grid integration (e.g. CSIP-Aus, OCPP, 15118, the MASS, Sunspec Modbus).

The specific versions and features required to achieve different use cases in Australia requires further detailing and standardisation. This is critical work required to streamline OEMs entry into the Australian market. Of course, Standards Australia also needs ensure no further delays to the current 4777.2 update.

The $94 billion question though is: how much do we want Australian consumers to have early access to this technology, as there is a lot we can do to bring it forward. 

For starters we could develop a national strategy to signal our strategic interest and clear out inefficient barriers to market access. 

We could offer installation incentives to accelerate deployment and industry learning, drive up technology production and drive down costs.

We would not need a huge amount and it is easy to envisage a simple, open access incentives program with clear eligibility criteria, pulling new technologies into our market. This could also generate an enormously valuable data set to inform policy and network planning and stimulate local industry development.

So, where does that leave us?

I returned from Europe more confident in the global auto industry’s commitment to unlocking the value of EV batteries for the benefit of electricity consumers, but also with greater clarity about the challenges that need to be addressed both here and in Europe. 

2025 is probably still the ‘go-live year’ for V2G in Australia, but whether that is achieved, and how quickly it accelerates thereafter, depends very much on whether we can get our house in order and pull international supply chain stakeholders into our extraordinary local market opportunity. 

Jon Sibley is director of enX, based in Canberra.