the day-ahead market, where a price is set according to a forecasts of demand.
A power generator meets about 99 percent of actual demand, but needs others to help it meet that last 1 percent at any moment. The opportunity to make a lot of money, Woodruff says, comes when demand spikes and third-party providers—typically large coal plants—bid by the hour to provide energy to fill the power demand.
For this last 1 percent, a power generator pays anywhere from double to four times the rate at which it sells electricity to its customers. Woodruff estimates that this is potentially a $10 billion market.
REV Technologies’ vision is something called Intelligent Charge Control, which involves harnessing a fleet of at least 100,000 electric vehicles and, in response to signals from the grid operators, taking energy out of the grid or putting energy into it.
“One vehicle’s battery doesn’t generate enough power to give back to the grid—it only works if you have thousands of cars and someone centrally making decisions about energy management,” Woodruff says.
It takes coal-fired plants a long time to ramp up or down in response to demand, so grid operators end up contracting more plants to participate than are needed just to make sure they’re covered. Woodruff says a large volume of vehicles can respond much quicker and with more precision than coal plants.
The issue, of course, is that you need a lot of cars to make the process work, and consumers just aren’t buying a lot of electric cars yet. But Woodruff is optimistic, and is betting big that it’s only a matter of time until that changes.
“I think the evolution of electric vehicles will parallel the Internet,” he explains, noting that the cost of microchips was once high enough that it wasn’t feasible for most consumers to own a home computer. “Non-tactical U.S. government vehicles will get converted from gas to electric as they are replaced, which will help stimulate the market.”
Haukur Asgeirsson, DTE Energy’s power systems technologies manager, says utility companies are definitely interested in REV Technologies’ concept. But he points out that there will have to be regulatory and safety standards in place—a bureaucratic process that he estimates will take about 10 years to play out, and that’s only assuming the value proposition has been proven and a large volume of electric vehicles are in place.
A123 Systems, for its part, says that since it plays on both the grid energy storage and automotive sides of battery deployment, it’s potentially interested as well. “Any multiple use of our batteries is of interest to us, but it’s hard to say what the monetary value is,” says Les Alexander, general manager for the Government Solutions Group at A123.
Gauthier also acknowledges that we’re probably at least five years away from the REV Technologies model of capturing and selling V2G technology, and one potential downside is uncertainty about how V2G applications would affect the life of a battery. NextEnergy hopes to start the first phase of its V2G Commerce program by the end of the month, with the tests running through the middle of 2013.
For phase two, Gauthier says more money will be needed to include more vehicles as NextEnergy figures out how to integrate its V2G charging technology with telecommunications systems, allowing customers to potentially use their smartphones to adjust their battery subscription preferences.
Gauthier also points out that though U.S.-based projects like Detroit’s V2G Commerce are making progress, Europe is “just a little further along.” Still, NextEnergy is far enough ahead on V2G that it was invited to be a lead speaker regarding the potential for V2G at the National Association of Regulatory Utility Commissioners summer meetings in Portland, OR, last month. “This isn’t just Michigan and the United States—this is global,” he adds. “We’re sharing lessons learned back and forth.”
That V2G has multibillion-dollar implications on a global scale is precisely why REV Technologies is betting big on it—and why it could be a coup for Michigan, which has suffered from America’s economic slump perhaps more acutely than any other state.
“This is probably a ways off,” Gauthier cautions, estimating that a fleet application for V2G is still three to five years away. “We need a certain scale of electric vehicles to be out there and right now it doesn’t exist. But if there’s a value proposition for enough people involved, a market will be created.”
