Cost of Vehicle to Grid Energy Storage

Rebecca Wolkoff
May 18, 2015

Submitted as coursework for PH240, Stanford University, Fall 2014


Fig. 1: An electric car and car charger, a potential energy storage solution of the future. (Source: Wikimedia Commons)

Grid energy storage is a problem. Without the stability energy storage would provide the grid, alternative energy sources are not viable on a large scale. At the moment, pumped hydro is the only noteworthy form of energy storage on the grid. 95% of grid energy storage comes from pumped hydro. [1] The other 5% is comprised mainly of thermal, compressed air, battery, and flywheel storage - all budding industries that have yet to make a competitive dent in the market despite being technologically viable for the past century.

Pumped hydro has slowed in development mainly because it is outclassed economically by natural gas as a peak-load technology (energy generation that primarily provides energy quickly when demand is high). A limited amount of unprotected land suitable as pumped hydro sites also has contributed to the lack of new pumped hydro added to the grid in recent years. [2]

While all of these storage technologies are physically feasible, our current market has not spurred any of these technologies into economic success: either in assisting the coal industry with cycling or in direct competition with natural gas to provide peak-load energy. [3] Over the next decade, these technologies will likely continue to increase energy storage on the grid, but at a snail pace.

There exists, however, a minor energy storage application with the potential to escalate grid energy storage exponentially: the electric vehicle.

Vehicle to Grid Storage

The concept of vehicle to grid storage is fairly simple. Electric cars have rechargeable batteries, and these batteries can be used for energy storage at times electric car owners are not using their cars; most of the day a car is parked, unused. While a single electric car only has enough energy to run your house for a day or two, several thousand electric vehicles attached to the grid would provide a reasonable amount of energy storage. For instance, a 10,000 MWh pumped hydro reservoir - the size of a good pumped hydro storage facility - is equivalent to between 120 thousand and 160 thousand Tesla cars (assuming 60 kWh and 85 kWh batteries, respectively). [4]

Unlike other storage technologies, however, electric cars appeal to a huge consumer base. Large-scale energy sources like pumped hydro reservoirs and compressed air storage only appeal to utilities and a few energy generators. Even then, because much of the technology is still in development and investing in energy storage would be a huge risk, few utilities and generators have considered building energy storage facilities.

Electric cars, on the other hand, potentially appeal to every person. In the US, cars are the primary source of transportation. As of 2013, IHS Automotive reports that there are over 235 million cars on the road in the US. [5] While only a sliver of a fraction of these cars are electric, the electric car industry is growing quickly. In 2013 the number of plug in electric vehicles on the road nearly doubled from 53 thousand cars to 92 thousand. [6]

In particular, if Tesla's future lithium-ion battery gigafactory is able to cut the price of lithium-ion batteries and thus bring electric cars into a competitive price range, it is likely that electric car sales will escalate even more dramatically in the next decade. Therefore, assuming the wide-scale availability of electric cars, whether electric vehicles will be able to be used as energy storage becomes a question of system infrastructure expenses.

Cost of Setting Up Vehicle to Grid Storage

Vehicle to grid storage requires quite an extensive infrastructure. Cars need to be able to discharge in public and private settings, cars need to know when they can and should discharge, and there must be a method of communication between the driver and the discharging equipment. An inventory of technology needed to successfully create vehicle to grid storage is listed below: [7]

The costs of all of these items can be difficult to assess because many of these pieces are currently not on the market or solely bought by utilities. Thus, this calculation will be a rough "back of the napkin" estimate. The table below explains estimated costs and where the estimates come from:

Equipment Cost How Estimate Was Made
EVSE (Public and Private) $6,440 per charger This is based on the estimated cost for an AC Level 2 Public Charge Station calculated in the Texas Triangle Plug-In Electric Vehicle Readiness Plan. [7]
Smart Meter and GCI $187.5 per meter This is based off of the cost of smart meters installed by Allete in Minnesota. There is typically one smart meter per residence or office. Thus, an apartment building or building may use multiple smart meters. [8]
HEM $100 per house or building This estimate is simply based on the average cost of routers, as the technology needed to build an HEM is not very different. While HEMs are currently on the market, typically companies charge a subscription fee, making it difficult to determine the actual cost of the technology based on these prices.
Software $100 per EVSE Because costs of software were already included in the HEM and Smart Meter estimates, this is only an estimate of the cost of EVSE software. Again, because hardware and software are often sold together, it is difficult to predict the exact cost. Thus, the estimate is based off of the cost of a typical computer's operating system - after all, the software in an EVSE is not more complicated than computer software.
Table 1: Energy infrastructure building blocks and prices.

Note that electric car costs and driver communication device costs are not included; these costs are picked up by the customer, not the utility or private company selling energy storage on the grid. Arguably the cost of private EVSE is also picked up by the customer, but in this calculation we will assume the energy storage provider will cover this cost.

To calculate total costs, we first need to calculate how much energy storage we want to add to the grid. Let's assume for a moment that alternative energy has not become big enough to contribute to the need for energy storage and that the primary investor will be coal plants wishing to use energy storage to increase efficiency by storing energy instead of cycling. The excess energy saved, calculated assuming coal plants cycle 7% of the year at a decrease to 20% efficiency, is 21.2 billion kWh. [3] Assuming all electric cars have 60 kWh batteries, this is the equivalent of 353 million electric cars.

Not all of the electric vehicles will be always available for discharging. At the same time, not all coal plants will be generating excess energy at the same time. More data of when cars are plugged in and when coal plants cycle would be needed to examine if 353 million electric vehicles exceeds energy storage needs. For the sake of simplicity, in this calculation we will assume 353 million electric cars is the maximum number of cars needed to provide enough energy storage for the coal industry, as this is the energy storage amount needed if all coal plants were cycling at once. A calculation depicting the minimum number of cars needed (if coal plants cycled optimally) will be performed using the same method in the conclusion.

To calculate the total cost, we will assume there are two EVSE per electric vehicle (a charger for at home and one for at work), a smart meter connected to each charger, one HEM for every electric vehicle (the primary sale of HEMs will be residential), and software for each EVSE. Thus, the total energy infrastructure cost per electric vehicle will be as follows:

Cost per Vehicle = [2 × Cost of EVSE] + [2 × Cost of Smart Meter ] + [Cost of HEM] + [2 × Cost of Software]
= [2 × $6,440] + [2 × $187.5] + [$100] + [2 × $100]
= $13,555 per electric vehicle

Thus, assuming there are 353 million electric cars on the road and the absolute maximum amount of energy storage is needed (i.e. all plants are cycling at once), the total infrastructure would cost $4.78 trillion.


Every year, the coal industry loses about $2 billion dollars annually in energy wasted that could have been saved with energy storage. [3] According to the above calculation, if the coal industry paid the capitol cost of a vehicle to grid energy storage infrastructure, savings would not be generated for over two thousand years.

Several assumptions were made in the calculation above. As more electric car owner charging habits are studied and EVSE become further mass-produced, the cost details will become more apparent. Most notably, however, it is probable that significantly less storage would be needed to produce savings for the coal industry – after all, it is unlikely that all coal plants would cycle at the same time. The above calculation can be thought of as an upper bound. In fact, if we assume a coal plant only cycles 7% a year, optimally only 1.484 billion kWh of energy storage (equivalent to 24.7 million cars) would be needed to save the coal industry $2 billion a year. Doing the same calculation as above with these new numbers, we find the total minimum cost would be $334.8 billion, bringing the time until profit is made to 167 years.

At first glance, a vehicle to grid energy storage system does not seem promising. Even if plants were cycled optimally, 167 years to recover cost is completely unreasonable. Yet, if the price of EVSE were cut to a fourth the current price and if our calculation included savings made by private EVSE owners (from charging drivers for use of their charging stations), this cost recover time could be cut to less than a decade. In addition, battery technology is currently developing rapidly. The better electric vehicle batteries get, the fewer electric vehicles will be needed to meet energy storage needs, and the cost recover time will be further reduced. Notably, the electric vehicle energy storage infrastructure cost has the potential to become cheap on a large scale because the cost of the storage device is pushed onto electric vehicle owners, not the EVSE owners.

In 2011, Obama called for one million electric vehicles on the road in the US by 2015. [9] As the 2014 year comes to a close, we are only about a fourth of the way there (sources vary depending on what types of electric vehicles and hybrid vehicles are included). Clearly, the industry has a long way to go. As of 2014, setting up an infrastructure for vehicle to grid storage would not be financially feasible. However, if electric cars are widely successful in the future and the cost of EVSE were to decrease due to wide-scale production, vehicle to grid storage could potentially solve the grid's storage needs a few decades in the future.

© Rebecca Wolkoff. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] "Grid Energy Storage," U.S. Department of Energy, December 2013, p. 11.

[2] C.-J. Yang and R. B. Jackson, "Opportunities and Barriers to Pumped-Hydro Energy Storage in the United States," Renew. Sustain. Energ. Rev. 15, 839 (2011).

[3] R. Wolkoff, How the Coal Industry Could Benefit from Large-Scale Energy Storage," Physics 240, Stanford University, Fall 2014.

[4] "2012 Tesla Model S Specifications and Features," Tesla Motors, 2012

[5] J. Hirsch, "253 Million Cars and Trucks on U.S. Roads; Average Age is 11.4 Years," Los Angeles Times, 9 Jun 14.

[6] D. Block and J. Harrison, "Electric Vehicle Sales and Future Projections," University of Central Florida, January 2014.

[7] "Texas Triangle Plug-in Electric Vehicle Readiness Plan," Center for the Commercialization of Electric Technologies, October 2012.

[8] "Utility-Scale Smart Meter Deployments, Plans, and Proposals," Institute for Electric Efficiency, May 2012, p. 3.

[9] "One Million Electric Vehicles By 2015," US Department of Energy, February 2011. p. 2.