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Modeling V2G spot market trading: The impact of charging tariffs on economic viability

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  • Signer, Tim
  • Baumgartner, Nora
  • Ruppert, Manuel
  • Sandmeier, Thorben
  • Fichtner, Wolf

Abstract

The increasing demand for electricity due to the diffusion of electric vehicles (EV) poses challenges to the electricity system. Vehicle-to-grid (V2G) technology is recognized as a promising approach for reducing grid stress and aligning charging demand with volatile renewable energy sources (RES), thereby fully exploiting the decarbonization potential of EVs. However, significant challenges continue to impede the successful market uptake of V2G technology, with fiscal policies for charging and discharging EVs being a notable barrier. In Germany and other European Union countries, the V2G tax scheme levies substantial taxes, fees, and surcharges on electricity purchases, while only the wholesale price is obtained for electricity sales. Hence, a significant price spread is necessary for profitable trading. Using the agent-based electricity market model PowerACE, we simulate four scenarios, demonstrating the tax regime's impact on the electricity markets and V2G revenues. Furthermore, we mirror the electricity market prices with users' willingness to pay for a V2G charging tariff. Our research underscores the pivotal role of taxes, fees, and surcharges as essential tools for policymakers to encourage V2G market adoption while maintaining its economic viability. Current legislation falls short of EV owners' financial expectations for V2G participation. A more favorable tax regime, however, could boost V2G trading, yielding profits in line with owner expectations and leading to lower wholesale market prices as well as reducing the necessity for stationary battery storage investments. With the increasing prevalence of EVs, the shift in V2G's role from a price-taker to a price-maker poses long-term profitability risks. Based on the simulation results, we recommend implementing favorable tax regimes, which could mitigate these challenges, facilitating effective V2G integration.

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  • Signer, Tim & Baumgartner, Nora & Ruppert, Manuel & Sandmeier, Thorben & Fichtner, Wolf, 2024. "Modeling V2G spot market trading: The impact of charging tariffs on economic viability," Energy Policy, Elsevier, vol. 189(C).
    • Handle: RePEc:eee:enepol:v:189:y:2024:i:c:s0301421524001290
    DOI: 10.1016/j.enpol.2024.114109
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