Detroit Leading U.S. Development of New Vehicle-to-Grid Technology

9/25/12Follow @XconomyDET

It’s no secret that auto manufacturers, battery manufacturers, government officials, and champions of renewable energy everywhere are disappointed by the slow rate of consumer adoption when it comes to electric vehicles like the Chevy Volt and Nissan Leaf.

But imagine how that might change if consumers could earn money from their electric cars. That concept, known as vehicle-to-grid technology or V2G, involves signing car owners up for a subscription program that pays them cash to sell energy from their vehicle’s battery to utility companies.

One application of this technology was originally developed in Michigan for the Defense Department to power military bases in places like Iraq and Afghanistan. And now, a group of notable companies is trying to take the technology even further, in one of the only demonstration projects of its kind in the U.S.

In a formerly desolate part of Detroit near Wayne State University, Chrysler, A123 Systems, REV Technologies, and NextEnergy are working to develop the charging infrastructure that would let cars return power to the grid. If it works, participants say the project could provide the tipping point to mass consumer adoption of electric vehicles.

“If money can change hands to support the sale of electric vehicles and all the industries associated with them, that could definitely influence consumer acceptance and understanding of what the full potential for electric vehicles really is,” says Gary Gauthier, NextEnergy’s director of business development.

NextEnergy sits across the street from TechTown, Wayne State’s business incubator, a few blocks from campus. Created 10 years ago by Michigan Economic Development Corporation (MEDC), NextEnergy’s mission is to “accelerate energy security, economic competitiveness, and environmental responsibility through the growth of advanced-energy technologies, businesses, and industries.”

NextEnergy conducts demonstration projects with industry and government partners, touts Michigan’s alternative energy strengths to global markets, invests in seed-stage companies, and works with political leaders to advance alternative energy as an engine for economic growth.

Gauthier’s career at NextEnergy began in 2010, after six years of working with Tier 1 auto suppliers on electric powertrain development. The industry was just beginning to ask whether electric vehicles could provide electricity back to power suppliers, instead of just consuming electricity.

“At the time, OEMs were engaged in getting the vehicles launched,” Gauthier says. “They didn’t want to talk about that—it was too far into the future. Same with thebattery manufacturers. Utility companies, same story. Everyone knew it was out there, but it was somewhere off in the future.”

Gauthier says he took a step back and decided that, rather than waiting, NextEnergy should take the lead on a V2G demonstration project. None of the entities wanted to initiate such a thing on their own, but were very interested if someone else did. Gauthier says Mike Finney, the MEDC’s president and CEO, saw the value of Michigan being a leader in the development of V2G technology. The MEDC committed to providing money through a U.S. Department of Energy grant for a key piece of equipment, called a dual bidirectional charging module.

Chrysler then stepped in to provide four fully electric vans. In total, Gauthier says the scale of the demonstration project is approximately $2 million.

Bob Lee, Chrysler Group vice president and head of engine and electrified propulsion engineering, says that while government regulations are pushing all automakers to work on alternatives like electric cars, “we choose to go the extra mile by also exploring how electric vehicles might mesh with our [energy] infrastructure.”

The technology behind the DBCM came from a micro-grid project NextEnergy had already done for the Defense Department about four years ago. “When the military goes into a country like Afghanistan, they have no idea what the power grid will be like—it may be up or it may be down, but they still need clean electric power,” Gauthier says.

Using the bidirectional module units that vary in size from a large washing machine to that of a shipping container, forward operating bases can plug in various power sources including renewables, the local grid, generators, and electric vehicle batteries into one side of the box. Clean AC power comes out the other end, powering critical needs in communications, munitions, and hospital operations. The DBCM can emulate any grid in the world and can change frequency, voltage, or test how things are affected by fluctuations in the grid.

With the DBCM in place, Gauthier says the next challenge in the demonstration project was determining if V2G technology could be commercialized. “There were a lot of pieces to work through,” he says. “The thing we were trying to find out is, who makes the money? Is there really money in it, how much, and who gets it? And can we use [V2G technology] to grow business?”

NextEnergy’s research into those questions led it to Vancouver, BC-based REV Technologies, which makes energy management systems for electric vehicles. Richard Woodruff, REV Technologies’ vice president of business development, REV had identified a “fantastic opportunity” to aggregate and control energy capacity in electric vehicles, allowing excess power to be sent back to the electric grid.

Woodruff says the problem utilities face is that the grid is always generating too much or not enough power. A network of about a dozen grid operators in North America, called Independent System Operators or ISOs, provide power to local utility companies like DTE Energy in Detroit. This works through something called 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.”

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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  • ngmdisqus

    As a battery engineer I still don’t get the case behind this. The financial incentives would have to be pretty good to entice a consumer to discharge their vehicle in the name of the grid and add wear and tear (mileage) to their battery.

  • garyg

    ngmdisqus – You’ve hit the primary question on the head – even if the technology does owrk is there a real business case for the vehicle owner to make any money on the transaction that is why we have named the project – V2G Commerce. There will need to be a balance of V2G value against any impact on the battery, which we are also assessing.