An economic model of vehicle-to-grid: Impacts on the electricity market and consumer cost of electric vehicles

Mads Greaker, Cathrine Hagem and Stef Proost

Resource and Energy Economics, 2022, vol. 69, issue C

Abstract: Higher battery storage capacity in electric vehicles (EV) implies less need for inconvenient recharging during long trips and increases the potential gains from vehicle-to-grid (V2G) electricity supply. We present an analytical model for the intertwinement of the consumers’ choice of battery capacity and the electricity market. We show that V2G increases the consumers’ choice of battery capacity, and it may reduce the cost of owning an EV vis-à-vis a traditional car. Furthermore, V2G alleviates the capacity pressure on peak hours, and thereby reduces the need for investment in generating capacity, saving social costs. Moreover, V2G may make the difference in electricity prices between peak and off-peak hours smaller, potentially increasing social surplus further. Based on a future scenario for the Belgian electricity market, we provide a numerical illustration indicating that the savings might be substantial.

Keywords: Electric vehicles; Vehicle-to-grid; V2G; Electricity market (search for similar items in EconPapers)
JEL-codes: Q41 Q42 Q54 R42 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:69:y:2022:i:c:s0928765522000276

DOI: 10.1016/j.reseneeco.2022.101310

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