Bidirectional Charging – Opportunities, Risks, and Prospects

E-mobility in Germany is on the rise. In January 2023, the one million mark for registered electric vehicles on German roads was surpassed. After a record year for newly registered electric cars in 2023, with 524,219 vehicles and thus an 11.4% growth compared to the previous year 2022, new registrations saw a slight decline in 2024, partly due to the discontinued environmental bonus. Compared to the same period last year, 16.4% fewer vehicles were registered. Nevertheless, the expansion continues to progress, as clearly shown in Figure 1.

From a long-term perspective, we are still at the very beginning of a development: according to the coalition agreement between the SPD, Greens, and FDP, the number of registered fully electric passenger cars is to multiply to at least 15 million by 2030. In total, approximately 1,458,000 fully electric cars are registered in Germany (as of April 1, 2024). Given the development of final energy consumption from renewable energies in the transport sector on the one hand1, and the agreed greenhouse gas emission reductions on the other hand2, a massive transformation in the transport sector is urgently needed. If this number is indeed reached, in less than six years, 15 million mobile battery storage units will be standing in German driveways, parking garages, and company parking lots for most of the day – up to 23 hours a day, according to the study “Mobility in Germany”3. The total battery capacity of vehicles newly registered on German roads in 2020 already amounted to approximately 9 million kWh.4 Assuming a constant average battery capacity in this decade, over 700 GWh or over 700 million kWh would be temporarily stored in electric cars by 2030. This amount of energy could theoretically cover Germany’s average electricity demand for about 11 hours.

Short-term and Long-term Storage Technologies

To estimate Germany’s storage requirements with increasing penetration of renewable energies in the electricity mix, a distinction between short-term and long-term storage is useful. The Federal Ministry for Economic Affairs and Energy describes short-term storage as storage

• with a high power-to-capacity ratio (kW to kWh),
• that undergoes several cycles per day,
• used for short-term fluctuations or for load balancing/load shifting within a day
• and are technically mostly batteries and pumped-hydro storage.

Long-term storage, on the other hand, refers to long-term storage options

• for sustained lulls as a backup or for seasonal storage,
• that undergo only a few cycles per year
• and are technically either power-to-x (typically hydrogen and methane), as well as large pumped-hydro storage power plants.

Consequently, the batteries of electric cars are clearly to be regarded as short-term storage.

For an electricity system with 80% renewable energy in Germany, which is the stated target of the federal government by 2030, the Association for Electrical, Electronic Information Technologies (VDE), for example, estimates the need for 70 GWh of short-term storage and 7.5 TWh of long-term storage, in addition to existing pumped-hydro storage. For a 100% scenario, an increased demand for short-term storage of 184 GWh is calculated, while long-term storage rises to 26 TWh. A study by the Fraunhofer Institute ISE determines a short-term storage requirement of 112 GWh for a 100% renewable energy scenario with more than three times the demand for long-term storage capacities.5 As can be seen in Figure 1, 10 to 15% and thus only a fraction of the potentially available capacity of e-mobility would be needed to cover the demand for short-term storage in an 80% scenario.

To estimate mobility behavior in Germany and thus the availability of electric cars, the aforementioned study by the BMVI also provides valuable insights: On a representative cut-off date, 41% of passenger cars in private households remained unused. Furthermore, approximately a quarter of passenger car mileage in Germany is accounted for by the daily commute to work, which means the vehicle is potentially usable for load management actions, provided the employer ensures the necessary equipment at the workplace.6 In view of the COVID-19 pandemic and the shift in the working world towards mobile work, these values should be understood as a lower limit. Consequently, the supply of available cars far exceeds the demand, as long as adequate charging infrastructure is assumed.

Another perspective impressively illustrates the dimension of the potential storage capacity of electric cars: Currently, 6.2 GW of pumped-hydro storage plants are installed in Germany, which fed 7 TWh into the German energy grid in 2020.7 If it is assumed that electric cars or their batteries have a charging capacity of 3.7 kW8, then the totality of electric cars registered in Germany in 2030 will have a capacity of 55.5 GW. With the 10 to 15% of necessary electric car availability shown in Figure 1, 5.55 to 8.33 GW of power would still be available, which is more than the total installed pumped-hydro storage plants in Germany. There is no way around making this capacity usable for the overall energy system, and in the following, some thought experiments will serve to further grasp the potential and impact.

The Policy and Business Models of Bidirectional Charging

The policy of discharging electric car batteries when not in use as part of intelligent load management is not new and is called bidirectional charging. A distinction is made between discharging for participation in intraday trading (base-peak-spread trade), Vehicle-to-Grid (V2G), and Vehicle-to-Home (V2H), each serving different interests and thus appealing to different stakeholders. According to a study by NRW.Energy4Climate and e-mobil BW, approximately 33 million battery-electric vehicles could be on the road in Germany by 2035, 65% of which could support bidirectional charging.⁹ This represents a potential of up to 380 GWh, which exceeds the demand for short-term storage by 2030 of 70 GWh by five times.

A prerequisite for both V2G and base-peak-spread trading is intelligent and secure IT communication and close networking, so that information about available vehicles, the (planned) use of the electric car by the customer, and the extractable power within a certain period can be determined promptly and without great effort. Equally essential is the use of a common communication standard or ensuring the interoperability of different systems to prevent costly duplicate structures.

Vehicle-to-Grid (V2G)

With V2G, the electric car is primarily seen as an option for grid stabilization. In the event of deviations between forecast and actual generation, the grid operator needs balancing power very quickly to compensate for fluctuations in grid frequency and thus ensure grid stability. The idea behind V2G is that energy from the vehicle battery is made available to the grid operator for this purpose. Consequently, the potential of electric cars for providing balancing power is already the subject of investigation by a working group of German transmission system operators. Through weekly tenders for primary balancing power and daily tenders for secondary balancing power and minute reserve power, V2G can also generate revenue for vehicle owners and service providers. The achievable revenues are not to be underestimated: with increasing penetration of renewable energy in the electricity mix, it becomes significantly more volatile without adequate storage options, which increases the need for balancing power. December 2, 2020, provides a prime example: due to a power plant failure, transmission system operators had to call up positive secondary balancing power amounting to 1,300 MWh, which was remunerated at up to €63,000/MWh. Fortunately, this is not the rule, and revenue opportunities remain significantly lower, but it illustrates the prevailing potential.

On the other hand, the impending upheavals in electricity supply can even have positive aspects for electricity suppliers: As shown, financial profit opportunities can arise for them in placing energy on the balancing power market or through base-peak-spread trading, provided the potential of e-mobility is utilized. With the help of two-way communication between vehicle owners and grid operators, electricity suppliers, etc., large amounts of energy can be fed into the grid, thereby generating significant revenue for both sides. It is important that the owner receives sufficient incentives to actively participate in disposition management and, ideally, to make their car available to the grid operator or service provider during all hours when it is not needed. The proven system of capacity and energy prices is conceivable: for every hour the car is made available, the vehicle owner receives a small flat fee. In the case of electricity withdrawal, each kWh is additionally remunerated, about which the owner receives all information transparently and promptly. Even if this is still “future music,” the markets will certainly bring forth these business models in the short term – assuming the regulatory framework is created to make the aforementioned potentials usable. This is an essential building block for the success of the energy transition.

Latest calculations show that the V2G policy can lead to significant financial relief. A study by the Fraunhofer Institute ISE and ISI, commissioned by the organization Transport and Environment (TE), predicts annual savings by 2040 of 8.4 billion euros in German energy systems and 22.2 billion euros across the EU. Projections suggest that total savings in the EU could reach 175.45 billion euros between 2030 and 2040. For comparison: the EU budget for 2023 recorded expenditures of 165 billion euros. These savings result from the expansion of energy capacities, a reduction in power outages, and decreased fuel consumption. However, this requires that by 2030, half of all electric cars and electric trucks can charge bidirectionally. The financial relief is also immediately noticeable for consumers. According to TE, electric vehicle owners in Germany can reduce their annual electricity costs by up to 45% through the use of bidirectional charging. Depending on the vehicle’s location, the capacity of the vehicle battery, and whether a photovoltaic system is present in the household, this can lead to savings of up to 727 euros per year.

A recent study by RWTH Aachen and The Mobility House also shows that concerns about a shortened battery lifespan due to bidirectional charging are unfounded – provided that intelligent charging and discharging management is used. The study found that V2G leads to an additional aging of only 1.7 to 5.8 percentage points after ten years. At the same time, marketing the battery can generate revenues of up to €600 annually, while the costs of aging are estimated at €100–€300. Thus, the benefits clearly outweigh the drawbacks.¹⁷

For example, the Munich-based e-car developer Sono Motors, together with the German company Kostal, developed a bidirectional wallbox for its electric car, the Sion, to be able to charge and discharge it with a power of 11 kW. Via an associated app, owners can specify whether and up to what battery charge level they want to discharge their car. The interface to the Home Energy Management System (HEMS) is now the decisive factor. A recommendation on which HEMS can communicate with the wallbox is to be made promptly for the Sion’s delivery start in 2023.

The city of Utrecht in the Netherlands, which has pre-ordered 100 Sions, has already announced its intention to enter the balancing power market and thus contribute to a stable supply for the grid. This business model is also very attractive in principle for German companies such as car-sharing providers, as the trend is increasingly towards a “shared economy,” where the temporary right to use an item is acquired, but it is never owned by the user. In addition to the added benefit for the grid, a second service line opens up for the participating companies that does not require additional hardware – a win for all involved! The same applies to all medium-sized companies that use larger fleets, for example, on weekdays, but which stand unused on weekends.

Base-Peak-Spread Trading

The idea behind base-peak-spread trading is simple: the electric car is charged by its own PV system or when a lot of cheap renewable energy is fed into the grid. During peak demand and thus higher prices, energy is withdrawn from the car again to sell it on the electricity market. The difference between the price paid during charging and the revenue generated is the vehicle owner’s profit margin, minus fees to the service provider. For the following example calculation, it is assumed that an electric car charges 30 kWh at 3 cents each at night, and since the vehicle owner works from home that day, 10 kWh at 9 cents each in the morning and 20 kWh at 10 cents each in the evening can be withdrawn again. This results in the vehicle owner receiving €2.00 for that day before deducting fees to the provider, generated fully automatically by software, while finding their car with an identical charge level.

π = 10 kWh * €0.09 + 20 kWh * €0.1 – 30 kWh * €0.03 = €2.00 (1)

This seemingly small amount adds up significantly over the course of a year – for both the provider and the vehicle owner. If a 25% fee is assumed, the latter can quickly reach over €250 to €300/year in this example. For the provider, the possible amount per car is correspondingly lower, but an elementary fact must be considered before calculating their revenue: due to the large quantities traded on the electricity market, the provider must connect several electric cars to form a “virtual power plant” to achieve significant amounts of electricity and market them on the EEX. Consequently, the provider’s revenue increases sharply with the number of available electric cars. For this reason, this option is again particularly conceivable and attractive for companies with their own large electric car fleet or car-sharing providers – or for any company that bundles the potential of the private electric car fleet and thus makes it usable.

Accordingly, the business model of base-peak-spread trading is comparable to that of pumped-hydro storage power plants – except that with electric cars, mobility is paramount, and additional revenues can be generated through intelligent charging and discharging. Currently, it appears economically unattractive due to low charging station availability and insufficient capacities in the e-mobility sector, as no provider is known in the market at present. However, this will only be a matter of time due to the rapidly increasing market penetration of electric cars and the associated technology.

Base-peak-spread trading must be distinguished from cost optimization in private electricity procurement, which occurs through time-of-day dependent prices and is offered by some providers. Here, the stated target is to reduce private electricity bills.¹⁰

Vehicle-to-Home (V2H)

Unlike V2G and intraday trading, V2H does not require an intermediary provider. The focus here is on intelligent load management by the private consumer, where their own electric car is used as private electricity storage and feeds electricity into the home grid when no generation (typically from PV) occurs (e.g., at night) or when it is lower than actual consumption. This option is particularly attractive for private individuals with their own PV system (so-called prosumers), as it enables an increase in self-consumption and promises extensive energy self-sufficiency in the summer months – after all, the electricity storage of a fully charged electric car with average battery capacity can theoretically already supply a four-person household completely for more than four days without intermediate charging (as long as the car is not driven).¹¹ Normally, an energy manager already regulates that only surplus PV electricity is stored in the car and that the needs of household appliances are prioritized.

Estimating the impact of V2H on the current business model of electricity distribution companies depends on many factors. Among other things, it is important,

• whether the private consumer owns their own PV system on their roof, with which they can charge their car in the summer months (with the current expansion plans of the federal government, hardly any new building will be constructed without one, or existing buildings will be significantly “retrofitted.” Since the tenant electricity model is also to be significantly improved, the potential will also be enormously raised here),
• how often the car is driven and thus cannot be charged during high self-generated electricity production,
• whether the car can be charged at the employer’s premises.

In the best-case scenario for the private consumer, with their own PV system, a (smaller) stationary battery storage, and the option to charge the electric car at the employer’s premises if needed, a very high degree of energy self-sufficiency of up to 100% including heat supply via a heat pump can be achieved from spring to autumn. Over the year, single and two-family households can achieve a degree of self-sufficiency of just over 70%, provided the available roof area is given.¹² With an annual household consumption of 4,000 kWh, the possibility of V2H would mean an increase in self-consumption of several hundred kWh/year compared to the current situation, which would immediately impact the revenues of electricity distributors. Since over 36% of Germans own a single or two-family house, which makes the installation of a PV system comparatively uncomplicated, the potential loss for electricity distribution companies is immense. The following example assumes a situation where 100% of the electricity demand of the population residing in a municipality (10,000 inhabitants) is supplied by the local electricity provider, moving towards a complete modernization of all single and two-family houses with the acquisition of a PV system, local electricity storage, and an electric car with bidirectional charging capability:

10,000 inhabitants = 2,500 households (2)
2,500 * 4,000 kWh/year = 10,000,000 kWh (3)
10,000,000 kWh * 36% single/two-family homes = 3,600,000 kWh (4)
3,600,000 kWh * 70% self-sufficiency = approx. 2,520,000 kWh (5)

Consequently, local electricity distribution companies could suffer revenue losses of up to 25% compared to a 0% self-sufficiency scenario, should the trend towards decentralized electricity supply and the maximization of self-sufficiency under optimal conditions for the private end-consumer continue to intensify.

On the other hand, it is of course to be assumed that the total electricity demand in the same municipality is likely to increase due to electric cars. According to the BMVI study mentioned above, electric vehicles have an annual mileage of 13,000 km/year, thus slightly below the average estimated annual mileage of 14,700 km.¹³ If these figures are taken as benchmarks and an average, real energy consumption of 17 to 21 kWh/100 km is assumed, the electricity demand per electric car is approximately 2,200 kWh to approximately 3,000 kWh per year.

13,000 km/(year * 17 kWh/100 km = 2,210 kWh/year) (6)
14,700 km/year * 21 kWh/100 km = 3,087 kWh/year (7)

Thus, approximately 1,000 electric cars, charged exclusively within the municipality of the vehicle owners’ residence, would be needed to offset the loss on the distribution side of the electricity provider. Considering the rate of homeowners and their partial ability to self-supply electricity, and assuming that the demand for electric cars is equal between these two groups, approximately 1,330 electric cars would be needed within the municipality.

Given the approximately 3,600 private vehicles in the exemplary municipality¹⁴, this would correspond to a share of fully electric cars of 37% – significantly above the 31% that are expected to be registered on German roads by 2030 if the transport policy target is met.¹⁵ In other words, the residents of the municipality would have to have an unusually high demand for fully electric passenger cars just to compensate for the loss of the municipal electricity provider.

Furthermore, the assumption that the vehicle is charged exclusively within the municipal provider’s distribution area is highly unrealistic – there is no obvious reason why the vehicle should not be connected at the employer’s premises, as long as the necessary infrastructure is provided. Moreover, the vehicle is moved precisely to cover longer distances and, for example, to get to the next larger city, which likely means leaving the provider’s distribution area. In this case, the number of electric cars needed to compensate for the impending loss of the electricity provider at the place of residence increases immensely.

Of course, all these calculations must be treated with great caution, as they depend on many factors not considered in these calculations. For example, the impact of demographic development on the demand for private passenger cars is essential, as is, for instance, the (regulatory) development of self-supply options such as the tenant electricity model or the efficiency of electric cars. Nevertheless, the calculations show that electricity providers will have to prepare for a strongly changing demand in the future due to sector coupling – as shown here, to their disadvantage.

Are there also hurdles?

Liability Issues for Manufacturers

But of course, where there is light, there is also shadow. A frequent criticism is the performance of the battery, which generally loses capacity faster with a higher number of cycles. However, this is only half the truth, as a distinction must be made between calendar aging (independent of use) and cyclic aging (battery degradation per charging cycle). According to Dirk Uwe Sauer, head of the Chair of Electrochemical Energy Conversion and Storage Systems Technology at RWTH Aachen, calendar aging of the battery can even be slowed down by V2G if, for example, the time in a fully charged state is reduced (which contributes most quickly to battery aging)¹⁶. Previous studies have also found no significant negative effect of V2G on the lifespan of electric cars. Nevertheless, this must continue to be tested, especially in field trials.

Last but not least, this is also a liability issue: Will electric car manufacturers continue to give their customers long-term warranty promises regarding battery durability? For Tesla, the matter is currently clear: if the car is used as an intermediate electricity storage, the warranty expires. On the other hand, many car manufacturers are actively participating in V2G and V2H pilot projects, such as Renault and Nissan. With great momentum and an investment package of over 100 billion euros, announced for a comprehensive e-mobility strategy, VW is now also jumping on the bandwagon of integrated e-mobility and announced that the VW ID.5 and ID.5 GTX models delivered in 2022 will already be equipped with a bidirectional charging function. In almost the same breath, it was announced that “charging and energy will become a core service line of Volkswagen” in order to be able to offer the advantages of using the electric car as stationary storage for V2X from a single source, as outlined in this article. According to VW, this will not only combat the curtailment of renewable energy due to grid bottlenecks but has also met with broad interest and thus potential for VW in a survey of 1000 VW ID drivers. This commitment underscores the attractive service line that is opening up due to the rapidly increasing number of electric cars in Germany – at the same time, it means that a heavyweight in the automotive industry wants to occupy this market, exposing interested companies to tough competition.

The Technology

Just like stationary electricity storage, electric cars show low losses of 10 to 15% due to the transformation of AC from the home grid into DC for use in the battery. Although this is an excellent value, especially compared to other storage media such as PtG, not every kWh fed in can be fully withdrawn. Furthermore, due to the primary purpose of mobility, the exact determination of transformation losses during charging and discharging becomes enormously difficult, which raises further questions, such as in the calculation of remuneration rates for V2G.

Furthermore, the inverter itself plays a decisive role in charging and discharging: if it is installed exclusively in the car and not in the wallbox, it often turns out to be a bottleneck. While an inverter in the wallbox or a public charging station charges the car with DC and a charging point of 50 kW or more, prospectively even up to 350 kW, commercially available wallboxes (for home use) charge with a maximum of 11 kW AC and achieve a charging point of only max. 3.7 kW with a single-phase charger. Consequently, the equipment can significantly reduce the attractiveness of the electric car for V2G. Moreover, bidirectional wallboxes are very expensive at €2,000 to €4,000 without considering installation costs (and subsidies) due to their currently low purchase volumes (which, however, is likely to change significantly with further rollout).

The current technical sticking point is primarily the IT system, which must bring together the different interests of the parties involved. Initial systems, such as the universal communication standard EEBUS, which is used by the joint research project “Bidirectional Charging Management – BDL,” still have to prove their performance in large-scale application. Software solutions such as ChargePilot from the technology company Mobility House appear more mature, having been primarily developed for load management applications in larger fleets or in the private sector.

Regulatory Framework

However, technical difficulties are by no means the biggest obstacles. The current regulatory framework stifles the use of electric cars as intermediate storage even before it truly begins. In addition to many other reasons, including data protection regulations, tax law issues, or possible de minimis cases, the regulations of the Energy Industry Act (EnWG) and the Electricity Grid Charges Ordinance (StromNEV), which continue to classify electricity storage as a load at the time of charging and as a generation plant at the time of discharge, are a major impediment.

It becomes obvious that the legislator must make immense adjustments in many different areas to make the potentials of sector coupling usable.

Conclusion

First, the enormous potential of e-mobility in Germany as intermediate storage must be highlighted. The combination of high power, high capacity, and long idle times makes electric cars very attractive for multiple uses. Ultimately, this is also a win-win-win situation:

• Vehicle owners can generate revenue by participating in the balancing power market or intraday trading.
• Grid operators are provided with a huge, otherwise largely unused potential of intermediate electricity storage, which reduces the need for fossil fuel power plants for peak load generation.
• Ultimately, the price of electricity for all consumers falls, as lower grid usage fees are the result, and consumers can optimally use their self-generated PV electricity.

The technical problems shown are more an expression of the current lack of market maturity of some system components than technical impossibilities. With intelligent management, bidirectional charging is not only economically sensible but also technically harmless. Battery aging remains low, while revenues from V2G exceed costs.

Clearly, the ball is in the court of politics. Without a fundamental change in the current legal framework, the potential of e-mobility as outlined will not be able to be utilized. At least as elementary is the prompt establishment of standards to prevent inefficient duplicate structures, for example, in the communication of wallboxes with grid operators or in measurement technology. Furthermore, financial support for bidirectional wallboxes should be considered to prevent a large-scale rollout of unidirectional wallboxes. In addition, a look across the English Channel to Great Britain could provide valuable insights, where the potential of bidirectional charging for grid stabilization has long been recognized as such.

The cooperation between Mobility House with its in-house software “Marketplace,” the car manufacturer Renault, and the local energy provider EEM on the Portuguese Atlantic island of Porto Santo shows how it can be done: Since 2019, a pilot project has been testing and optimizing the interaction of electric cars, stationary electricity storage, and renewable energy generation plants to supply the island with CO2-neutral energy in the long term. Last but not least, VW’s recently announced commitment to enter the electricity supplier market and to market storage for (private) load management actions, and thus theoretically also be able to place them on the balancing power market, illustrates that significant revenues are beckoning in these areas in the future.

Given the statements in the coalition agreement of the SPD, Greens, and FDP that “the cross-sectoral use of renewable energies [and] decentralized generation models will be consistently [strengthened]” and an independent legal definition of energy storage will be adopted, the hope for a prompt improvement in the regulatory practice of electric cars as intermediate electricity storage is greater than it has been in a long time. This could provide the necessary starting signal for a promising, dynamic market and open up new, attractive revenue opportunities for all companies that engage early with the possibilities of bidirectional charging.

¹