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Energy Tech: Electric Vehicles and Decentralising Energy Storage Systems

  • Market Insight 07 July 2021 07 July 2021
  • UK & Europe

  • Energy & Natural Resources

Electronic vehicle (EV) adoption is an important part of the transition to a low carbon energy future, but rapid EV uptake will create drastic changes in electricity demand, potentially resulting in voltage imbalance and the need for network reinforcement. However, the EV itself may provide part of the solution. With vehicle-to-grid (V2G) technology, EVs' batteries become a storage device when parked.

In November 2020, the UK Prime Minister published a Ten Point Plan for a "green industrial revolution", which includes the banning of the sale of petrol and diesel cars by 2030. This is in line with the UK target of achieving Net Zero greenhouse gas (GHG) emissions by 2050, as set out in the Climate Change Act 2008. Electronic vehicles (EVs) will be an important part of the transition to a low carbon energy future, with predicted sales of EVs around the world expected to rise up to 58% of all vehicles sales by 2040. In the UK, a 2018 prediction by National Grid states there will be 36m EVs on the road by 2040.

The shift to EVs is welcomed. However, the rapid growth and expansion of EVs may bring its own problems. Although a quicker adoption of EVs will help to slow down climate change by limiting vehicle emissions, rapid EV uptake will create drastic changes in electricity demand, potentially resulting in voltage imbalance and need for network reinforcement. Additionally, renewable sources often powering EVs, such as wind and solar energy, are intermittent in nature and are not always be available “on demand.” Ensuring consistent availability of electricity requires either "dirty" generation (e.g. from natural gas) or extensive battery or other storage facilities.

EVs as Portable Power Storage  

However, the EV itself may provide part of the solution. Vehicle use is highest in peak segments of commuting hours, with cars sitting idle in parking lots or garages for the majority of the day. Remarkably, over 90% of cars are parked at any given time. With vehicle-to-grid (V2G) technology, EVs' batteries become a potential storage device when parked. The energy stored in a charged EV battery can be used to balance the grid, storing energy when there is a surplus, and selling energy back into the grid when there is a wider demand. A whitepaper published by Nissan, Imperial College London, and E.ON estimates that a successful V2G technology can help save up to £885 million annually.

To achieve this, artificial intelligence and machine learning are key. Reinforcement Learning (RL) algorithms can be utilised to study individual EV’s needs and characteristics, providing a routing service to maximise energy savings within any given trip, and collating average data of energy used within a period of time. This will provide the necessary information for the EV owner to understand how much energy, on average, he can store and eventually sell back into the grid, without affecting his daily needs.

Externally, AI can analyse wider market trends and use that data to predict future market loads and schedule charging cycles to minimise possible peaks, allowing EV integration into the grid. It may also use price signal algorithms to avoid charging at peak hours, or at certain locations, creating a dynamic charging rate at any given time depending on the available data and demand. The change in pricing signals could be accessed by EV owners through a real-time application, allowing EV owners to sell or buy electricity securely in a decentralised manner through their smartphones, potentially using blockchain-enabled wallets, where transactions could be automated through smart contracts. Not only would individual consumers be able to profit from their own EVs, but they will also be able to contribute to the nation's renewable energy capacity and capability.

Doing so will help integrate the renewables into the grid, eventually reducing the need for highly consuming power plants, especially back-up stations which sell dirtier energy to suppliers due to lack of supply, whilst limiting the negative impact of EVs on electricity capacity. In effect, the fleet of EVs can become a "virtual power station", discharging their cumulative stored energy into the grid when not needed to drive.

Dominion Energy in Virginia, United States, has put principle into practice, utilising electric school buses which are charged into the grid after school runs, acting as storage and making room for further integration of renewable energy. Although still in an experimental stage, it is expected to help store and supply electricity to more than 15,000 homes. Closer to home in the UK, Octopus Energy is trialling UK’s first V2G system, stating that a smart energy system could save up to £40 billion by 2050.

Using Tech to create Micro-Grids

Another problem presented by widespread adoption of EVs is the strain which the additional demand for electricity places on existing national grids. Installing the infrastructure necessary to charge a nation's fleet of EVs will be very costly and will likely cause bottlenecks in transmission and distribution networks. Smart technology, allowing usage patterns to be established via data gathered from the Internet of Things, could enable electricity generated from rooftop solar arrays and stored in EV batteries to be sold to other local "prosumers", meeting local demand for EV charging. [This will be examined further in a separate article in this series]

What’s in it for Investors?

With the push to embrace EVs, especially in Europe, there are many opportunities for investors, including the design, planning, building, operating, and maintaining of EV infrastructures. This extends to the production of the EVs themselves, the charging infrastructures, battery storage technology, and investments in smart meter applications, as well as the E-commerce which surrounds the technology.

In the UK, the Department for Transport (DfT) and Office for Low Emission Vehicles (OLEV) are considering including EV infrastructure requirements in England to residential and non-residential buildings, along with a Road to Zero Strategy which will ensure extensive charging points all over England. This emphasises the opportunity for those in the infrastructure industry. The success of V2G and bi-directional charging will also increase the demand of charging infrastructure. The use of EVs as storage will increase the capacity and demand for renewable energy, thus opening new investment opportunities, or partnership possibilities, for those in the wind or solar sectors.

Legal and Practical Barriers

It will not all be plain sailing though. As discussed above, increasing adoption of EVs will place capacity pressure on existing electricity networks. The same is true of technical and cloud infrastructures to support the IT functionality necessary to make the system work efficiently. Any blockchain infrastructure must also be flexible to the dynamism of the electricity grid, the production of new renewable sources, and the amounts of EVs on the road, at short notice.

Cybersecurity poses a risk to be managed – recently $31 million was stolen off cryptocurrency Ethereum due to loopholes in the code. Smart contracts and blockchain-based programs are currently in their infancy and the legal issues they pose are still being identified. The technology behind V2G and the integration to the smart grid requires personal data collection on location, preferences, distances travelled, and as well as GDPR restrictions on how personal data can be used, there are wider privacy concerns.

Licensing regimes around the supply of electricity to EVs as well as the implications of consumer selling their energy back must also be addressed. In the UK, supplying electricity without a licence or an applicable exemption is a criminal offence under Section 4 of the Electricity Act 1989. Although Ofgem has confirmed that electricity supply to an EV is not a “supply to premises” under the Electricity Act 1989 s4(1)(c) and 64(1), Ofgem has stated that supplying electricity to a charge point is a “supply.” This risk creating a licence requirement for EV owners wanting to sell excess energy back into the grid, complicating the V2G process and making it more costly. Further clarity from Ofgem may therefore be necessary to understand the consumer implications of V2G, and a change to legislation/regulations may be required.

On a practical level, there are risks surrounding interoperability of multiple functionalities, such as the grid, the E-commerce network, charging points, and the EVs themselves. Some market leaders are trying to establish market standards in the hope of facilitating the interoperability of data transmission, such as the Open Charge Point Protocol (OCPP). However, further developments may be necessary to bridge gaps within the wider industry. As similar projects are developed and accepted over time, V2G technology may be more widely available. Additionally, V2G system has been correlated with battery degradation. At the current pricing of EV batteries, EV owners will not financially profit from the V2G method. Consequently until battery prices get lower, V2G implementation is more likely to be an ancillary service.


EVs and Tech could decentralise and revolutionise the way we store and access our energy, enabling the widespread adoption of EVs. However, as with all innovations, new practical and legal risks will need to be identified and mitigated to turn the possible into reality.

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