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Vehicle To Grid Makes Absolutely No Economic Sense Whatsoever.

A hard sell:

To begin, we need to determine what the purpose of an electric vehicle is. If that purpose is to operate as a vehicle, then the critical issue must be the versatility in one's ability to move from one place to another. That means maximizing the distance that could be traveled on a moment's notice. For instance: the Leaf can only go 60-70 miles on a full battery, so if someone is called from work to go on a family emergency and then return to work… they probably won't be able to go home. This lack of flexibility from the standpoint of middle-of-the-day options is one of the largest problems facing EV marketing and sales.

Hence EV advocates are crying out for the ability to plug in their cars at work - not because they want to donate some of that precious stored energy TO the grid, but because they feel anxious from the lack of flexibility in their driving options and want to increase those options, so they demand more energy FROM the grid.

If the EV owner were participating in V2G, and got some kind of emergency phone call during a time frame when the battery had been discharging energy to the grid - leaving the battery further discharged then when he/she had gotten to work to begin with - then that would further reduce the EV's capacity to function as a vehicle at precisely the time in which it was most critical that the vehicle be able to function as a vehicle. This fact will absolutely reduce enthusiasm for the concept without significant financial incentives.

The idea behind V2G is that owners will happily allow their vehicle to cycle the battery: fast charging and fast discharging half of the battery while the car remains parked. The impact on the battery life for rapid cycling may not be well characterized, but we know that it is 100% negative - it absolutely will decrease the longevity of the battery, though we don't know how quickly it will decrease the life of the battery. If the battery costs ~$15,000, how much will the power company have to offer the prospective owner of the battery to cut 30% of its lifespan? What about 40% of the lifespan?

For a Leaf owner, if you assume the natural battery longevity is 10 years, and this V2G insanity will shorten the lifespan to 7 years, we can run the following assumptions:

The average Leaf owner will show up to work having depleted 30% of their battery from their commute, meaning that they have 20% left to donate back to the grid for half-V2G. That's 4.8 kWh. For reasons that we'll get into later, it's highly unlikely that any given vehicle will charge or discharge energy at a rate greater than ~3 kW from work, and less from home.

Raw Economics:

Assuming they contribute 4.8 kWh, recharge 10 kWh, and then again contribute 10 kWh to the grid every weekday, and contribute 12 kWh during the highest demand every weekend day for 7 years, you have the following completely unrealistic scenario where a Leaf owner will donate critical excess capacity during ultra-peak demands on weekdays totaling 27.01 MWh, while drawing a less critical 18.25 MWh from the grid during peak hours on weekdays; and on weekends the total amount donated to the grid during peak periods would be ~8.76 MWh during that 7 years.

Economically, the price of "Super Peak" (summertime) critical need energy in CAISO can be as high as ~$300/MWh, while the price of the "peak" energy in CAISO averages ~$100-150/MWh, and the price of off-peak nightly energy hovers ~$50/MWh. (These are hub prices, not final consumer prices - the point here is to analyze the potential gain from the perspective of the power companies). CAISO is far and away the market with the greatest profit potential for V2G.

If we assume the energy drawn overnight has a value of $50/MWh, the energy drawn during non-critical peak hours on weekdays has a value of $100/MWh, the energy contributed during peak hours on weekdays has a value of $300/MWh, during 4 months of the year and the energy contributed during "peak" times on weekdays for the rest of the year has a value of $150/MWh, then assume that the energy contributed during the peak times during the weekend has an average value of $100/MWh… we get a total value of the vehicle's contributions equaling $6,276.00, and a total value of the withdrawals equaling $2701. That leaves a profit of ~$3575.00 for the power company… which seems like a tough profit consideration if they have to convince an EV owner that will lose some use of his/her vehicle and lose 30-40% of the lifespan of a $15,000 battery. But this very sloppy back-of-the-envelope calculation was done assuming that every kWh that was sold for free and every kWh received was contributed for free AND ASSUMING THERE IS NO CHARGING LOSS OR LINE LOSSES.

Once you factor in a 10% charging loss for all charging overnight, an 8% discharging loss for all discharging, and a 6% line loss for all power sold to the point-of-charge and a 6% line loss for all power received from the point-of-charge… We start getting into real trouble.

Using the above line loss and charging loss assumptions, now we only have $5427 worth of energy contributed back to the system, and we require $3149 worth of power, for a net profit of only $2278… and we're still sacrificing 30-40% of the longevity of a $15,000 battery.

Last Mile Transmission considerations:

The big problem here, however, is last-mile concerns on transmission. It's easy to make big-picture assumptions about the grid as though it had infinite input/output capacity at any point… but that is not the case.

Most people work in large office towers that have "cubeland" space dedicated to them. If someone in one of those "cubes" decided to bring a dorm-style refrigerator to plug in within their cubical, they would be sharply reprimanded. If 4 people decided to do so on the same floor in the same day, they'd trip the breaker. I have friends who are not allowed to plug in CELL PHONE CHARGERS (~3W) at their cubes due to restrictions on energy draw. This makes sense to people that understand the wiring schematics of the buildings, and know how close any particular breaker runs to the maximum energy transfer level it is allowed. Regardless of how absurd it seems, anecdotes are endless of how a new worker ended up bringing down an entire floor of cubeland by plugging in a coffee pot or radio or something. It's not as though the building had been wired with #30 gage wire or something, but the breaker system had been designed for a certain maximum load, and as more and more desks were squeezed into a space, that load was more quickly approached and surpassed.

Scale that exact same type of system up, and you get the grid. The power lines running down the street to Doty Scientific Inc have a rated capacity, as do the transformers, and the much smaller lines that connect DSI to the larger lines running down the road. With 4 CNC machines, 10 regular machines, several hundred fluorescent light bulbs, 5 ovens, 2 furnaces, a plug-flow reactor, 1 GC, 2 high-powered magnets in a spectrometer lab, 8 large AC units, 20 computers, and dozens of other low and mid-level power draws, there are many times we may run 50-80 kW (Yes that's a LOT for a small business. Our research is incredibly energy intensive, and we fund that research by manufacturing equipment that is sold internationally.) But even with as much power as we run, a single vehicle being charged at 3 kW would require ~ 6% of our total draw. If we had 5 such vehicles being charged at any given time, we WOULD trip the service limit for the building - something we've never done before.

A typical small commercial enterprise (say a small clothing store in a small strip mall) might have lights, cash registers, a TV, a fan, and maybe a cell-phone charger for the person behind the register… but have parking for 20+ cars. It's easy to imagine one of these stores might operate comfortably with only an average draw of less than 5 kW. 1 single charging car out front may double their load. If the grid is analogous to a cubeland floor of an office building, then each of these businesses and stores is analogous to a single cube, and each of those EV's might be analogous to something between a personal dorm-style refrigerator.

In order to adapt to this, the power company will have to re-wire the connection from the buildings to the transmission lines, upgrade the building's service, then upgrade the transmission line capacity for the street and some of the transformers.

So if your initial reaction to my monetary calculation was "but if we use the cars for frequency regulation (NYSE:FR) they can cycle hundreds of times during an 8 hour period!), consider that the actual maximum power deliver from the battery of a Nissan Leaf is more than 80 KW… then imagine what that would do to last-mile transmission considerations if several dozen vehicles tried to dump 80 kW back through the meter to the local transmission lines on the same street all at once.

The transmission upgrades in established regions are so expensive that in some cases that power companies have opted for fixed muli-MWh battery stations to accommodate higher loads just to delay upgrading the transmission capacity!

Think about it.