Economic Viability of Vehicle-to-Grid (V2G) Reassessed: A Degradation Cost Integrated Life-Cycle Analysis

Cong Zhang, Xinyu Wang, Yihan Wang () and Pingpeng Tang
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Cong Zhang: School of Automotive Engineering, Harbin Institute of Technology, Weihai 264209, China
Xinyu Wang: School of Automotive Engineering, Harbin Institute of Technology, Weihai 264209, China
Yihan Wang: Southampton Ocean Engineering Joint Institute, Harbin Engineering University, Harbin 150006, China
Pingpeng Tang: School of Naval Architecture Ocean Engineering, Harbin Institute of Technology, Weihai 264209, China

Sustainability, 2025, vol. 17, issue 12, 1-20

Abstract: This study presents a comprehensive life-cycle assessment of Vehicle-to-Grid (V2G) economic viability, explicitly integrating the costs of both battery cycling degradation and calendar aging. While V2G offers revenue through energy arbitrage, its net profitability is critically dependent on regional electricity price differentials and the associated battery degradation costs. We develop a dynamic cost–benefit model, validated over a 10-year horizon across five diverse regions (Shanghai, Chengdu, the U.S., the U.K., and Australia). The results reveal stark regional disparities: Chengdu (0.65 USD/kWh peak–valley gap) and Australia (0.53 USD/kWh) achieve substantial net revenues of up to USD 25,000 per vehicle, whereas Shanghai’s narrow price differential (0.03 USD/kWh) renders V2G unprofitable. Sensitivity analysis quantifies critical break-even price differentials, varying by EV model and annual mileage (e.g., 0.12 USD/kWh minimum for Tesla Model Y). Crucially, calendar aging emerged as the dominant degradation cost (67% at 10,000 km/year), indicating significant battery underutilization potential. Policy insights emphasize the necessity of targeted interventions, such as Chengdu’s discharge incentives (0.69 USD/kWh), to bridge profitability gaps. This research provides actionable guidance for policymakers, grid operators, and EV owners by quantifying the trade-offs between V2G revenue and battery longevity, enabling optimized deployment strategies.

Keywords: vehicle to grid; battery degradation; economic viability; life-cycle assessment (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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