A View of Market Readiness

V2G is competing with a range of alternative technologies to see which one can overcome its barriers and limitations and gain the greatest proportion of the market.

So, will V2G cross the finish line first? What are the markets where we expect to see V2G first becoming viable, and what are the timescales in which we might see this take place?

To understand this, we are going to consider two aspects – location and timing.

Location

Earlier in this week, you heard that the key criteria for assessing the readiness of a market for V2G were:

• The total size of the automotive market – in essence, how many vehicles there are. If there are a lot of vehicles, this makes the market more scalable and therefore the cost of implementing V2G is likely to be lower. Larger markets are also more attractive to investors and V2G businesses. Higher volumes of vehicles also means that there is more opportunity to trade their flexibility in different energy markets, many of which have quite large minimum volume requirements. This means that there is more opportunity to select higher value flexibility services.
• Current EV uptake rate – even if there are a lot of vehicles in the market, if EV uptake is low then the opportunity for V2G is smaller and will take longer to access. As with the previous point, the higher the rate of adoption of EVs, the greater the volume of flexibility and therefore the more valuable that flexibility is.
• Existing deployment level of EVSE – This has the potential to become a two-edged sword. If there is a high level of deployment of EVSE then this is likely to encourage faster adoption of EVs – which creates greater opportunity for V2G. However, if the EVSE market is completely saturated (i.e. every home already has a standard or smart charger installed) then this can delay the uptake of V2G as owners may wait until existing chargers reach the end of their lives before replacing (typically 8-10 years). The key is to find the balance point, where EVSE is not limiting adoption of EVs, but where it is also not yet the norm.
• Whether flexibility or Demand Response services are enabled in this market – As we have already learnt, not all V2G services rely on trading flexibility in energy markets. However, this is still a strong indicator for general adoption of V2G into wider policies and regulation. Where demand response services are prohibited, it is typically found that there are other technical, regulatory or policy barriers which will limit the readiness of the market for V2G.

In 2019 Cenex published an analysis of V2G market readiness, considering markets at a country level. The results can be seen in the table below:

Indication of V2G Readiness of International Markets – V2G Market Study, Cenex 2019

Key: Colours are based on numerical scores which can be found and explained in the full report, however in essence the colours indicate relative scores. Red is the lowest score and green represents the highest score

This shows that the UK and France were the lead markets for V2G, with strong emerging opportunities in Germany, Japan, Canada, USA and China. There is a particularly strong opportunity in China due to the number of vehicles and rate of EV uptake, and if changes are made to enable trading of flexibility (termed DSR in this report) then this would quickly become the main market opportunity for V2G. There has been movement in some of these markets since this study was first carried out, and so the current situation may look slightly different, however this approach is extremely beneficial when considering how to advocate to make a market better for V2G.

As we discussed already, V2G market assessments can be carried out regionally (as above) but also for specific customer types such as company car fleets, hire vehicles, buses or any number of other applications.

Timing

Predicted V2G technology development Timeline, Cenex 2021

Looking back a few steps to where we discussed barriers earlier this week, we see that V2G technology is still in early phases of development and is only likely to achieve commercial readiness for CCS and AC chargers around 2030. However, as many countries have committed to net zero ambitions by 2040 – 2050, we are likely to see increased demand for flexibility solutions such as V2G around 2030 as the world prepares to meet its net zero carbon emission targets.

Due to the use of CHAdeMO charging across Asia, it is likely that Japan, followed by China, will become the first countries to reach commercial-scale V2G activities around 2025 – 2030. Other lead/emerging markets such as UK, France, Germany, Canada and the USA are expected to follow once V2G is established within the CCS charging protocol – leading to commercial-scale V2G activities around 2030 – 2035. Other markets, where more significant barriers exist such as Central and South America, are expected to follow once the technology and integration into the wider energy system are fully demonstrated – leading to adoption of V2G at scale around 2050.

George E. P. Box is renowned for saying: “All models are wrong, but some are useful”

The same is of course true of predictions, and so it is likely that the above predictions will not play out perfectly, but they provide a useful indication of location and timescales for V2G readiness.

What Do You Think?

In this section we have focused largely on regional market readiness. However, we can use the same approach to evaluate the market readiness of certain business sectors or vehicle types. In the discussion below, why not consider one sector or vehicle which you know a little about and share your thoughts on the four readiness criteria and timing.