On the surface, electric vehicles (EVs) may seem of scant relevance to the renewables industry, little more than an expensive novelty that might one day increase the demand for electricity. Yet a consensus is emerging that the ongoing expansion of wind and solar power may not be possible without the rise of EVs.

“There is not going to be 40% energy generated by renewables in Europe over the next 15 years if electric vehicles are not going to be there — they’re too important,” Francesco Venturini, chief executive of Enel X and former head of Enel Green Power, told a recent energy conference.

The reason has nothing to do with the fact that EVs can transport people from A to B without the use of fossil fuels. It is because they have huge batteries that will be plugged in for large proportions of each day — able to store enormous amounts of renewable energy. Multiple studies show that, on average, cars are only in use for 5% of each 24-hour period.

And while there are currently few EVs on the road, their numbers are set to grow exponentially as they become cheaper than their petrol and diesel counterparts — a crossover that is expected somewhere between 2022 and 2026, depending on whom you ask.

According to Bloomberg New Energy Finance’s (BNEF) Electric Vehicle Outlook 2018 report, annual EV sales will increase from 1.1 million globally in 2017 to 11 million in 2025 and then to 30 million in 2030. By 2040, there will be 559 million EVs on the road worldwide, it says.

The price of EVs largely depends on the cost of their most important and expensive component, the battery. And battery prices are falling fast. BNEF figures show that the average EV battery cost had fallen from $1,000/kWh in 2010 to $209/kWh at the end of 2017, and is set to fall to $70/kWh in 2040.

“Batteries are still on a steeper [downward cost] curve than PV, so they will halve in price in the next five years — literally halve in price,” says Serge Colle, global power and utilities advisory leader at financial giant EY.

EY calculates that in Europe alone, by 2030, EVs will be adding 45GW of battery capacity to the grid every year. To put that figure into context, there are currently less than 5GW of grid-connected batteries installed around the world and 169.6GW of pumped hydro storage, according to the US Department of Energy’s Global Energy Storage Database.

Vattenfall's road less travelled to a clean energy future

In simple terms, all these millions of batteries will be able to store vast amounts of renewable energy at times when the supply of electricity from wind and solar plants is relatively high, and send it back to the grid when that supply is low — a method known as vehicle-to-grid (V2G) — which will help to stabilise the output from the two variable energy sources.

This storage will also help to stabilise the income from wind and solar plants.

Generally speaking, the more variable renewables there are on a network, the greater the fall in wholesale market prices. This is because when it is particularly windy and/or sunny, the grid becomes overwhelmed by an abundance of electricity, and there is not enough demand for all this excess power — making energy prices fall to zero or below.

And the more renewables on the grid, the more frequently this will happen, threatening the profitability — and therefore viability — of future projects.

However, if this surplus, unwanted energy can instead be stored, it will probably eliminate zero or negative prices altogether as EV batteries will create a demand for that excess electricity.

This would not only mean that existing and future wind and solar projects would become more profitable, but it will also allow gigawatts of projects onto the grid that otherwise would not be built, thus further decarbonising the global energy system.

Without these batteries, Venturini and others contend, it will be impossible to guarantee grid supply as the share of wind and solar in the system increases.

Utilities dispel all doubts about renewables' ability to power planet

“The beauty of it is the more renewables you get in the system, the more the market will need flexibility tools... and the more value EVs are going to bring to the electricity sector,” Francisco Carranza, managing director of Nissan Energy, tells Recharge.

“You can instruct all the cars to start charging at the highest rate possible to capture all the energy, and when there is not enough wind or solar, you can instruct the cars to send the electricity back.”

Of course, this will not eliminate the need for back-up power for renewables — if the wind doesn’t blow for a week, there will be no energy for EVs to store — but it will reduce those times when back-up power is needed.

How will this all work?

This may all sound great in theory, but questions abound. Can millions of car batteries really help balance the output from wind and solar farms across national or even international networks? How will it work in practice? Will drivers be happy for their EVs to be used in this way? Don’t they need their EV batteries to be fully charged at all times? How will drivers be compensated for the use of their batteries? And how will such an enormous system with millions of input points be managed and controlled?

First, let’s look at EV usage patterns.

Currently, EV owners usually plug in their cars when they get home from work and leave them to charge overnight, or in some cases, charge them at work.

As long as the car is fully charged when it is needed — ie, the following morning or at the end of the working day — they do not care when exactly during that 8-12-hour plugged-in period that the battery actually receives its electrons.

Energy Transition could aid new social order: Sefcovic

Slow home EV connectors take six to 12 hours to fully charge a fully depleted battery, while fast public charging points can do this in one or two hours. But EV drivers tend to use only a fraction of their batteries’ full capacity on a daily basis. On average, across Europe, cars are only driven about 40km a day, yet a full charge will provide enough power for anywhere between 100km for a tiny two-seat Renault Twizy to 539km for a top-of-the-range Tesla. Most of the time, EV batteries will only need a top-up, rather than a full charge. Even the tiny Twizy with the slowest home connector would only need around three hours and 20 minutes to top up its battery on an average day, yet will probably be plugged in for around 12 hours overnight.

And because EV batteries do not need to receive their electrons as soon as they are plugged in, distribution system operators (DSOs) can instead supply this energy at times that it best suits them, such as when supply is high and wholesale prices are low. This one-way flexible charging system is often referred to as Vehicle 1 Grid (V1G).

And as previously stated, the DSO could take power back from the vehicle if the amount of wind and solar energy on the network falls and/or demand rises.

EV batteries will also be able to contribute to grid balancing — and therefore make money — in other ways too.

According to Carranza, there will be 13 ways for grid-connected EV batteries to generate revenue, including price arbitrage and ancillary services such as frequency response, voltage control and peak shaving.

“The algorithm [of the energy management software] is going to be combining different markets and combining different services to maximise the value that you’re making from the asset,” he says.

Enel X: Utility 2.0

It is assumed that EV owners would be happy for their vehicles to be used in this way as they will effectively be paid for doing nothing — and the income would far outweigh any potential downside of damage to the battery by the cycle of charging and discharging.

“Any services provided from our vehicle battery that is connected at home is basically very low-demanding for the battery. It’s very gentle,” says Carranza.

EV owners could even receive the electricity to charge their cars for free, in return for allowing their batteries to be used in this way — an arrangement currently being offered by Nissan in the UK (see panel below).

And, of course, drivers would not have to personally monitor electricity prices and act on them — a home energy management system would make the choices for them based on previously agreed thresholds and scenarios.

In the not-too-distant future, a similar type of demand response — the ability to be switched on or off to suit the needs of the grid — will also be offered by non-EV technology, including electric heating and cooling systems, and Internet of Things (IoT) hardware such as smart washing machines, dishwashers, fridges, freezers and swimming pool pumps.

As Vattenfall chief executive Magnus Hall tells Recharge: “You will have the storage that’s flexible, you will have the demand that’s flexible and then you will not have so much flexible production [such as coal- and gas-fired power plants] any more.”

You might think that such an energy world is pie-in-the-sky thinking. After all, it would require billions of EVs, smart thermostats, IoT devices and rooftop solar panels to be intelligently connected to every part of the distribution and transmission network, from local street-corner substations to wind and solar farms and multi-gigawatt power plants hundreds of kilometres away.

'European renewables need a grid fit for the energy transition'

The digitalisation of this entire system — including the aggregation of millions of EV batteries, the management of billions of small exchanges of energy and the revenue those transactions generate — would surely be too complex and too expensive.

Yet the consensus among energy experts seems to be that not only will this all be affordable, it is also inevitable — and approaching fast.

On the whole, the technology already exists. For instance, peer-to-peer energy trading systems, such as Vattenfall’s Powerpeers in the Netherlands, have already proven that PV and EV owners can be financially compensated for tiny exchanges of electricity, while the likes of Germany’s Sonnen is already aggregating thousands of rooftop PV panels and home and EV batteries to create “virtual power plants”.

“A smart device just requires a micro chip [that costs] a couple of cents. You put it in and it’s smart,” says Sander van Ginkel, managing director of the European Utilities Strategy practice at Accenture.

“So the cost is not so much preventing the adoption of these technologies. I’ve seen predictions that in some years from now, when this whole IoT is really rolled out, that there will be ten [internet-] connected devices per person on Earth. Why is that? Because the cost is so low.

“Technology is not a restriction any more. The technology is there, it needs to be adopted, it needs to be translated into relevant propositions. It needs to be secure. But I don’t see that as an issue any more.”

While the digitalisation of the electricity system may require relatively small upfront costs, these will be outweighed by the savings that will be made by everyone along the chain through greater efficiencies.

'If you own two electric cars and one's not charged, the DNO’s life will be hell'

“It will pay for itself on the back of the efficiency gains that we get,” Steven Martin, chief digital officer at GE Power, tells Recharge.

“As we’re amassing huge amounts of data on the performance of networks across the utility space, and that’s from generation, transmission, distribution and consumption, our ability to build better models for both asset optimisation as well as the optimisation of the network gets better.”

Artificial intelligence — or perhaps more accurately, machine-learning algorithms — will have to play a leading role in this process, he explains.

“The level of complexity that we’re dealing with is massive and growing; I think it will be impossible not to [require machine learning]. We need to do real-time evaluation of the effective price of energy and of the fuel source from the thermal side. We also need to measure — on a second-by-second basis — yield from renewables, along with consumption. Doing all of those things, as well as doing flow control and voltage balancing, all in real time is incredibly challenging.”

GE already has the software, known as Predix, that is able to manage all this data and optimise the network accordingly, he adds.

“Our software, whether it’s on the generation side, transmission side or distribution side, is all getting this injection of intelligence.”

The bigger problem is probably going to be regulatory — to allow this system to operate fairly and efficiently, including allowing EV batteries to send power back to the grid and compete on the energy markets.

The riddle of storage and Europe's 1,000-piece energy puzzle

According to Van Ginkel, there are five changes that must be made to regulatory frameworks — consumers need equal access to markets in a technologically agnostic manner; markets need to become more time-based and dynamic; information around flexibility needs to be more transparent; there needs to be more accountability for transactions, grid imbalances and demand-response baselines; and there needs to be standardised solutions for smart energy technology.

“A very important condition to make this all work is that prices should become more time-reflective,” he tells

Recharge, explaining that residential consumers should be able to access hourly prices, rather than fixed ones.

Carranza points out that Nissan is not yet able to generate income from all 13 of its possible revenue streams for regulatory reasons.

“It’s not legal yet for us to participate in all the markets,” he says. “Many of them are highly protected, so basically you need to be a physical power plant to access them.”

For instance, in the UK, Nissan can only sell power back to the grid when distribution companies tender for flexibility services; the company plans to aggregate up to 2,000 of its Leaf car batteries in the next 18 months for such purposes.

“One of the things that we’re working on now with the UK government is to try to understand how we can change this industry that has been heavily centralised to an industry that is basically heavily decentralised, in which consumers are active or proactive participants,” says Carranza.

Digitalisation market set to boom to $64bn with energy transition

But he denies that the problems will be too complex to solve.

“It’s just a case of putting the right people around the table and giving them some money and time and they’re going to come back with a solution,” he smiles.

With the European Commission’s Clean Energy Package proposing solutions to some of these problems — including ensuring that “all generation, storage and demand resources shall participate on [an] equal footing in the market”, as well as new intraday and balancing markets — it isn’t a stretch to say that it may not be long before we enter this brave new world.

The promise of free electricity