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

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  • Greaker, Mads
  • Hagem, Cathrine
  • Proost, Stef

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.

Suggested Citation

  • Greaker, Mads & Hagem, Cathrine & Proost, Stef, 2022. "An economic model of vehicle-to-grid: Impacts on the electricity market and consumer cost of electric vehicles," Resource and Energy Economics, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:resene:v:69:y:2022:i:c:s0928765522000276
    DOI: 10.1016/j.reseneeco.2022.101310
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    References listed on IDEAS

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    Cited by:

    1. Littlejohn, Christina & Proost, Stef, 2022. "What role for electric vehicles in the decarbonization of the car transport sector in Europe?," Economics of Transportation, Elsevier, vol. 32(C).
    2. Nagel, Niels Oliver & Jåstad, Eirik Ogner & Martinsen, Thomas, 2024. "The grid benefits of vehicle-to-grid in Norway and Denmark: An analysis of home- and public parking potentials," Energy, Elsevier, vol. 293(C).

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    More about this item

    Keywords

    Electric vehicles; Vehicle-to-grid; V2G; Electricity market;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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