Fleet operator risks for using fleets for V2G regulation Davion M. Hill n , Arun S. Agarwal, Francois Ayello DNV Research and Innovation, 5777 Frantz Road, Dublin, OH 43017, USA article info Article history: Received 15 April 2011 Accepted 20 October 2011 Available online 30 November 2011 Keywords: V2G Fleet Electric vehicle abstract Future fleets of vehicles may include electric vehicles (EVs) or hybrid electric vehicles (HEVs) because of potential fuel savings. Recent demonstration of diesel parallel hybrids in a delivery fleet led to fuel economy improvements, and hybrid bus demonstrations exhibited twice the fuel economy of the conventional bus. Fleet ownership may include management of a fleet of vehicles as small as 10 units and as large as hundreds or thousands. In addition to fuel savings, the newer extended range electric vehicles (EREVs) and pure EVs permit vehicle to grid (V2G) opportunities. These V2G opportunities may present additional revenue for fleets by providing ancillary services to local grid independent system operators (ISOs), provided that the burden of driving and V2G services do not accelerate the degradation of the battery systems in these vehicles. The subject of this study is to determine the financial risks associated with accelerated battery degradation in a V2G-enabled EREV fleet expected to perform ancillary service duty while charging in addition to the normal loads of drive cycle duty. We determine that battery cycle life during V2G duty is a critical parameter, which can determine whether or not the business model is viable. & 2011 Elsevier Ltd. All rights reserved. 1. Introduction Vehicle-to-grid (V2G) opportunities may present additional revenue for fleets by providing ancillary services – such as voltage regulation – to local grid independent system operators (ISOs). In order for a fleet to consider this possibility, the electric vehicles (EVs) or extended range electric vehicles (EREVs) should be evaluated for their range, but if the fleet engages in a V2G activity, the battery is required to store and dispatch energy during a V2G exchange; there is added wear on the battery, which may accelerate its degradation and perhaps hasten its replacement. The business model therefore depends on the balance of added revenue, fuel savings, and added operational costs. Fleets of service or delivery trucks are relevant to businesses such as distribution facilities, shipping companies, airports, power companies, warehouses with delivery services, municipalities with public transportation, taxi services, infrastructure-related entities with a group of service vehicles, and even schools with a fleet of school buses. Recent demonstration of diesel parallel hybrids in a delivery fleet led to a 42% improvement in fuel economy (White, 2010). Other hybrid buses achieve twice the fuel economy of the conventional design (Bush, 2010). Therefore, the fuel savings can be significant and any added benefit of V2G revenues may make the business case viable, but not without some social, policy, economic, and technical challenges. The subject of this investigation is the adoption of truck-based extended range electric vehicles (EREV) in a delivery fleet with an additional V2G revenue opportunity. 2. Why fleets? There have been thorough explanations of the V2G opportu- nity elsewhere involving the concept (Sovacool, 2009; Galus et al., 2010), the use of vehicles as regulation sources (White, 2011; Kempton, 2005a, 2005b; Tomic, 2007; Kempton et al., 2008; Andersson et al., 2010), and some examination of the effect of V2G on battery life (Peterson et al., 2010). Many of these models have examined residential vehicles, and these models have investigated energy exchange as a function of depth of discharge of the battery. Other sources have claimed that battery cycling during V2G duty will not affect the battery life. While some cost models of the V2G scenario have included the cost of battery degradation, they have modeled residential scenarios and have not presented the V2G opportunity in the perspective of those who would put it into action. Fleet owners bear the cost of maintenance and fuel usage. The fuel consumption of many delivery trucks is under 10 miles per gallon, though there are EREVs that can attain over 30 miles per gallon, representing as much as a 2–3  improvement in fuel economy. The fuel savings may alone justify the added capital for the EREV, but there are additional opportunities for V2G. A fleet owner could consider Contents lists available at SciVerse ScienceDirect journal homepage: www.elsevier.com/locate/enpol Energy Policy 0301-4215/$ - see front matter & 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2011.10.040 n Corresponding author. Tel.: þ1 614 761 1214. E-mail address: Davion.M.Hill@dnv.com (D.M. Hill). Energy Policy 41 (2012) 221–231