Testing electric vehicle participation in energy markets: vehicle-to-grid (V2X) economics and battery degradation considerations.

Summary Vehicle-to-Anything (V2X) is an umbrella term that explains the use of electric vehicle batteries to gain additional value during periods of non-use. V2X services generate battery revenue through dynamic one-way (V1X) or two-way (V2X) charging to provide benefits to the electric grid, reduce energy consumption in buildings and homes, or provide backup power to loads. A meta-analysis of the economic potential yields results contradictory to the literature and indicates that power consumption management, resource adequacy, and deferral of grid investment are more valuable than arbitrage in the energy markets and secondary reserve. While I agree that development is for and through the market, I emphasize that V2X will develop within the confines of the regulatory environment.Regulators therefore have a catalytic role to play.An important question is the extent to which additional use of the vehicle's battery will affect the battery's capacity over its lifetime. Understanding the intricacies of battery degradation is therefore critical to estimating costs. Li-ion batteries are complicated electrochemical systems that exhibit two simultaneous degradation phenomena, calendar aging and cyclic aging. In vehicular applications, calendar aging tends to be the dominant life degradation effect, which reduces time, the most important component of degradation.Therefore, the cost of degradation is fundamentally time dependent.A central claim of this thesis is that the marginal cost of V2X is neither zero nor negligible as accepted in the economic literature, but is highly dependent on battery degradation. Here we propose a theory of V2X marginal costs that is based on two principles: 1.) there is an efficiency cost associated with charging the battery, and 2.) the true degradation cost of V2X takes into account the opportunity cost, i.e., the degradation beyond what would have been the normal use of the vehicle.Having a clear concept of the marginal cost of V2X, allows for the proper accounting and balancing of all the real costs: cost of electricity, efficiency costs of the system, and degradation of the battery. This will enable optimal charging strategies and properly inform energy market bids. The result is a more nuanced understanding of marginal costs. The impact of the V2X battery on battery life could be considered a cost, a benefit, or zero. I conclude that V2X can provide more economic value than previously understood and that this additional value will be realized through the simultaneous improvement in charging efficiency and reduction in EV battery degradation.