The ultimate battery: how your EV could reduce power bills and contribute to a cleaner energy grid

Father and his little daughter charging their electric car.

Since 2022, electric vehicles (EV) have been supporting the grid in times of need.  

In February 2024, a milestone was achieved when they were used to pump electricity into the grid during a blackout in Victoria. It was a world first event.  

It happened in response to transmission towers being knocked down west of Melbourne, leaving more than 500,000 Victorians without power. The EVs used during this event came from a project funded in 2019 by ARENA known as Realising Electric Vehicles-to-Grid Services (REVS). 

Just one year later, the National Roadmap for Bidirectional EV Charging looks to move Australia forward with the power of EVs and what is known as bidirectional charging—the same technology used in the REVS project.  

The roadmap also seeks to save the energy system billions of dollars and reward consumers for their role in accelerating the clean energy transition.  

Both the event and the roadmap show that Vehicle-to-Grid (V2G) technology works and has the potential to transform how we look at EV benefits beyond transport alone.  

ARENA has been active in this space for several years. The roadmap is the latest in a series of Australian first studies and projects supported by ARENA since 2019.   

The roadmap will directly contribute to the Australian Government’s National Consumer Energy Resources Roadmap. 

What’s the deal with EVs and V2G?    

Australia has several grids that deliver electricity to Australian households, businesses and industries. The grid is more specifically known as the National Energy Market (NEM) in Australia’s eastern states. The grid is largely powered by emissions heavy processes that burn fossil fuels. 

To have a grid with 100% renewable supply, there are challenges to manage. One of these challenges is intermittent energy production from solar and wind. When the sun doesn’t shine and wind doesn’t blow, where will the energy come from to meet demand? 

Electricity demand can rise for any number of reasons, including rising populations and seasonal use of air conditioners and heaters. If renewable power isn’t there, Australia would have to fall back on emissions heavy power generation to meet the demand.   

If Australia hopes to meet net zero targets by 2050, supplying grid demand from clean energy sources is critical. Models from the Clean Energy Council predict 94% of Australia’s energy needs can be met by renewables by 2030 to meet ongoing emissions reduction targets.

The grid could use EVs as a source of energy in a completely renewable supply market. 

By 2050, estimations show EVs could make up 80% of the gross battery storage capacity in the grid. Because of this, technology like bidirectional charging, including V2G, will play an important part in the transition.  

The 2024 blackout event and use of EVs to provide power to the grid is proof of this concept. 

How can we utilise EV energy for V2G?    

When we look at the use of EV energy, there are several core technologies.      

The first and most simplistic is smart charging, also known as V1G.  

This technology allows for signals to be sent to EVs from the grid or electricity retailers. A signal is sent from the grid to the EV and the consumer can choose to reduce electrical demand from EV charging, or an agreement is made to do this automatically. V1G can also tell an EV to start charging when grid demand is low. It’s a simple measure to reduce stress on the national grid.     

Newer EVs offer Vehicle to Load (V2L) technology as well. This allows EV owners to plug and run appliances directly from the vehicle using energy stored in its batteries.   

Next step in the ladder is Vehicle to Building and Home (V2B and V2H). Buildings and homes can utilise EV power, sharing the flow of electricity. While plugged in and not charging, the EV could either take or give electricity to the home or building it’s plugged into.     

V2G is the pinnacle of all these technologies and the core component that would allow EV power to be fed back into the grid. The goal is to use EV battery power and energy stored within the battery, to flow into the grid when demand is highest.   

Technology from V2G differs from the others, because it specifically focuses on exporting EV energy into the grid. 

Untapped power and consumer potential 

To comprehend how much energy could be available, we can look to Europe as an example. 

Electric vehicle charging port plugging in EV modern car.

A study in 2024 found EVs by 2040 could ‘contribute up to 9% of Europe’s annual power supply, becoming the 4th largest power supplier. During peak demand periods, EVs could supply 15-20% of instantaneous electricity demand, acting as a massive, distributed virtual power plant. 

The study also notes how EVs by 2040 could: 

• Enable 430 gigawatts (GW) of solar PV capacity. 

• Reduce stationary battery storage needs by up to 92% and reduce backup power plant capacity by 126 GW. 

• EV drivers could also save up to 52% on annual electricity bills. 

Estimates show there will be 160 million EVs worldwide by 2030 and by 2050 it will hit around one billion. One billion EVs boasts an electrical storage capacity around 40,000 GWh—four times the capacity needed on the planet.  

Although slowing recently, projections indicate Australia’s share of EVs will rise in line with global trends. 

An ARENA commissioned report from 2023 by enX consulting, found the potential storage in Australia’s EV fleet by 2050 will be nearly four times the total of the NEM’s storage requirements. 

Only 10% of this capacity could provide 37% of the total NEM storage needs, according to the report. In 2030, the report found that EV fleet battery capacity is likely to surpass all other forms of storage in the NEM. 

Recent models now suggest V2G could save Australians up to $5 billion by reducing the need for large-scale battery storage investments.

ARENA supports projects that implement V2G technology nationally. Without V2G technology, emission reduction goals for 2030 and 2050 could still be met but with extra complication and cost.   

Barriers facing V2G     

As V2G technology is in ongoing development, Australia must solve several challenges to achieve the enormous power potential. This includes, but is not limited to, the improvement of standards, approval of hardware and support for the automotive industry to adopt and promote the technology.      

As a sign of progress, recent changes to Australia’s inverter standards will make bi-directional chargers accessible for Australians. The news marks a step forward in making V2G technology widespread and used throughout Australia’s EV landscape. 

The roadmap notes there are several barriers currently for the uptake of V2G and bidirectional technology in Australia. 

These barriers include: 

• The need for updated policies to support the evolving V2G and bidirectional technology standards for plugging into the grid. 

• The value proposition to manufacture bidirectional EVs. 

• The uptake of EVs privately through consumers and manufacturer benefits. 

An immediate issue for Australia to address, is the need to incentivise automakers to manufacture and sell EVs with the bidirectional technology at scale. In 24-months consumers may be able to access the technology if the roll out is done correctly. The technology is currently mature enough to support this 24-month timeframe.  

Through national policy and actions, rapid progress is achievable.  Policy must seek to improve the value proposition for consumers and reduce costs and risks for automakers to supply EVs. 

Research has shown that battery technology is an important part of the V2G puzzle. Advances in protecting battery life will increase the incentive to EV owners to use V2G technology when plugging into the grid.   

Recent research from UNSW showed, if treated properly, V2G can extend battery life instead of compromising it.   

Could V2G lower household bills?    

Using EVs with V2G is a strategy that could be extremely effective in driving down retail energy costs for customers.     

By providing electricity providers with a flexible back-up power supply, it would remove the need to fire-up peak demand power generators. The generators typically stay offline and turn on when needed and bring a higher cost to consumers. If EV energy can be utilised as a source of electricity for consumers, it would present a cost-effective alternative to peaking power plants when demand spikes.     

Power from EVs can also help when electricity demands spike during lengthy blackouts or outages caused by natural disasters. With extreme weather set to continue and climate change impacts become more apparent, EVs ability to help in this crisis is crucial.

The technology presents a cost saving opportunity for consumers and electricity prices. This savings opportunity can only come to fruition if progress toward bidirectional technology continues. 

The technology provides an energy asset for consumers to have flexibility, cost savings and increase of control in their energy use. In many cases, home batteries to store electricity won’t be necessary as your EV would be a ‘battery-on-wheels’ and power homes on-demand, as well as act as energy storage for solar panels and home energy systems 

EVs could power consumer homes on demand. They could also double as energy storage solutions for solar panels, as part of home-energy systems. Consumers could store energy from solar in the day then use it at night. The effect causes a reduction in their electrical draw from the grid and energy bill costs.

V2G technology could transform EVs into significant sources of storage. Grid operators who struggle to balance renewable energy production and climate-caused power disruptions, could then use electricity from EV’s to maintain the balance.

Battery power from EVs could help avoid firing up fossil fuel power stations when demand spikes, which ultimately is beneficial on the road to net zero.

What’s next?     

There are still a few unknowns about integrating EVs into the grid. Because of this, ARENA focuses its investments and conducts trials and studies to find answers.  

A future where EVs play a key role to unlock a cleaner, more reliable grid is close. But there is still some work left to be done for V2G technology and its ecosystem. Momentum for Australians to purchase EVs and use them to its maximum potential must continue and be steady. The effect—cheaper electricity in return.

The technology could help reduce large emissions from fossil fuel power plants, as EVs, with V2G, take on and reduce the power demand. It’s part of the net zero ecosystem ARENA is working to help create.      

Whilst some believe V2G is still a long way away, evidence from the roadmap suggests Australia already has all the components it needs for a V2G future.