Using vehicle-to-grid technology for frequency regulation and peak-load reduction

This paper explores the potential financial return for using plug-in hybrid electric vehicles as a grid resource. While there is little financial incentive for individuals when the vehicle-to-grid (V2G) service is used exclusively for peak reduction, there is a significant potential for financial return when the V2G service is used for frequency regulation. We propose that these two uses for V2G technology are not mutually exclusive, and that there could exist a "dual-use" program that utilizes V2G for multiple uses simultaneously. In our proposition, V2G could be used for regulation on a daily basis to ensure profits, and be used for peak reduction on days with high electricity demand and poor ambient air quality in order to reap the greatest environmental benefits. The profits for the individual in this type of dual-use program are close to or even higher than the profits experienced in either of the single-use programs. More importantly, we argue that the external benefits of this type of program are much greater as well. At higher V2G participation rates, our analysis shows that the market for regulation capacity could become saturated by V2G-based regulation providers. At the same time, there is plenty of potential for widespread use of V2G technology, especially if the demand for regulation, reserves, and storage grows as more intermittent renewable resources are being incorporated into the power systems.