Building a Business Case for Corporate Fleets to Adopt Vehicle to Grid Technology (V2G) and Participate in the Regulation Service Market Authors: Andres de Los Rios Vergara & Kristen Nordstrom Advisor: Dr. Jarrod Goentzel Sponsor: XL Hybrids MIT SCM ResearchFest May 24 25, 2011 Main Problem: Project Focus What is the vehicle to grid (V2G) revenue opportunity? How does V2G affect the business case for adopting EV and PHEV fleets? Methodology: Detailed cost structure for EV and PHEV fleets integrated into a 10 year projected cash flow model Evaluation of V2G revenue using a simulation tool developed by the electric grid system operator in New England Target Audience: Fleet managers considering adoption of Electric Vehicles (EV) and Plug in Hybrid Electric Vehicles (PHEV) May 24 25, 2011 MIT SCM ResearchFest 2 1
What is Vehicle to Grid Technology? May 24 25, 2011 MIT SCM ResearchFest 3 Regulation service Ramp down Source: NE ISO 2008 Data Ramp up May 24 25, 2011 MIT SCM ResearchFest 4 2
Methodology Fleet manager inputs Cost inputs Revenue inputs Cost model Revenue simulation model 10 Year Projected Cash Flow V2G industry inputs Cost model Cost EV PHEV ICE Capital costs X X X Infrastructure costs X X Operating costs Electricity X X Diesel X X Battery X X Controller X X Charger and wiring X X Brakes X X X ICE Engine X X Electric Motor/Generator X X Maintenance X X X May 24 25, 2011 MIT SCM ResearchFest 6 3
Revenue simulation model Revenue EV PHEV ICE Capacity payment X X Service payment X X Capacity payment: Paid regardless of whether it is used or not Service payment: Paid for the energy actually provided or stored. Absolute sum of ramps up and down We simulated both regulation down and regulation up & down May 24 25, 2011 MIT SCM ResearchFest 7 Projected Cash Flow Model Scenarios: PHEV Ramp Up & Down Component Year 0 1 2 3 4 5 6 7 8 9 10 Capital investment 16,800,000 Infrastructure Cost 470,000 Electricty cost 93,126 93,126 93,126 93,126 93,126 93,126 93,126 93,126 93,126 93,126 Fuel cost 1,157,800 1,157,800 1,157,800 1,157,800 1,157,800 1,157,800 1,157,800 1,157,800 1,157,800 1,157,800 Battery replacement costs 0 0 0 0 0 0 0 0 0 2,500,000 Controller Costs 0 0 0 0 0 0 0 0 0 0 Charger, wiring, switches, adapter Costs 0 0 0 0 0 0 0 0 0 0 Brake Costs 0 0 0 0 0 300,000 0 0 0 0 Engine Costs 0 0 0 0 0 0 0 0 0 0 Electric Motor/Generator Costs 0 0 0 0 0 0 0 0 0 0 Maintenance Costs 1,129,946 1,129,946 1,129,946 1,129,946 1,129,946 1,129,946 1,129,946 1,129,946 1,129,946 1,129,946 Total Costs 17,270,000 2,380,872 2,380,872 2,380,872 2,380,872 2,380,872 2,680,872 2,380,872 2,380,872 2,380,872 4,880,872 Capacity payment 169,988 169,988 169,988 169,988 169,988 169,988 169,988 169,988 169,988 169,988 Service payment 338,448 338,448 338,448 338,448 338,448 338,448 338,448 338,448 338,448 338,448 Total payment 508,435 508,435 508,435 508,435 508,435 508,435 508,435 508,435 508,435 508,435 Regulation revenue after deducting aggregator fee 508,435 508,435 508,435 508,435 508,435 508,435 508,435 508,435 508,435 508,435 Net cashflow 17,270,000 1,872,437 1,872,437 1,872,437 1,872,437 1,872,437 2,172,437 1,872,437 1,872,437 1,872,437 4,372,437 Net Present Value 29,908,516 May 24 25, 2011 MIT SCM ResearchFest 8 4
Base Case Assumptions 250 vehicles (electric, plug in hybrid or ICE) Fleet service requirement: 70 miles per day, 253 work days per year 100% of fleet plugged in 12 hours per day Diesel $/gallon: 4.00 Diesel miles/gallon: 10.14 for ICE, 11.56 for PHEV Battery Size: 85 kwh for EV, 3.9 kwh for PHEV Charger Capacity: 30 kw for EV, 1.9 kw for PHEV Vehicle Costs = $130K EV, $59K PHEV, $50K ICE May 24 25, 2011 MIT SCM ResearchFest 9 RESULTS: Base Case Total Operating Cost with V2G Revenue Total Capital & Infrastructure Investment The EV & PHEV have higher initial investment costs, but lower operating costs w/ V2G revenue May 24 25, 2011 MIT SCM ResearchFest 10 5
Sensitivity Analyses Hundreds of sensitivity analyses run in order to define best case variables Electric Vehicle Parameter Scenario Battery size (kwh) Dynamic Charger size (kw) 6.24 / 19.2 / 30 SOC (%) 20 / 30 / 40 Regulation duration (h) 12/14/16 Regulation period (h) 20 8 / 18 6 / 16 4 Plug in Hybrid Electric Vehicle Parameter Scenario Battery size (kwh) 3.9 / 10 / 20 Charger size (kw) 1.92 / 6.24 / 19.2 SOC (%) 30 / 50 / 70 Regulation duration (h) 12/14/16 Regulation period (h) 20 8 / 18 6 / 16 4 Best Case Parameter Values Best Case Scenario Parameter EV PHEV Battery size (kwh) 99 10 Charger size (kw) 19.2 19.2 SOC (%) 30% 30% Regulation duration (h) 12 hours 12 hours Regulation period (h) 20 8 20 8 May 24 25, 2011 MIT SCM ResearchFest 11 RESULTS: Best Case Scenario 3% Decrease in Total Costs between Regulation Down V2G & Regulation Up & Down V2G Electric vehicles = LOWEST total costs ICE vehicles = HIGHEST total costs May 24 25, 2011 MIT SCM ResearchFest 12 6
Best Case: 10 Yr Projected Cash Flow BEST CASE Ramp Down V2G Ramp Up & Down V2G ICE EV PHEV EV PHEV 10 yr total Cost $ 32,529,037 $ 32,723,614 $ 32,747,383 $ 33,032,631 $ 33,198,377 10 yr total V2G Revenue $ 2,268,780 $ 1,758,834 $ 3,499,284 $ 3,124,115 $ 10 yr total Net Cost $ 30,260,257 $ 30,964,780 $ 29,248,099 $ 29,908,516 $ 33,198,377 per mile Cost $ 0.730 $ 0.740 $ 0.740 $ 0.750 $ 0.750 per mile V2G Revenue $ 0.050 $ 0.040 $ 0.080 $ 0.070 $ per mile Net Cost $ 0.680 $ 0.700 $ 0.660 $ 0.680 $ 0.750 per vehicle/day Cost $ 51.00 $ 52.00 $ 52.00 $ 52.00 $ 52.49 per vehicle/day V2G Revenue $ 3.60 $ 2.80 $ 5.50 $ 4.90 $ per vehicle/day Net Cost $ 48.00 $ 49.00 $ 46.00 $ 47.00 $ 52.49 Revenue per vehicle/year $ 910.80 $ 708.40 $ 1,391.50 $ 1,239.70 Savings vs. ICE 8.9% 6.7% 11.9% 9.9% Reduction in TCO from V2G 7.0% 5.4% 10.7% 9.5% EVs & PHEVs have lower Net Costs than the ICEs May 24 25, 2011 MIT SCM ResearchFest 13 Management Insights Fleet managers can expect to off set 5 10% of the total cost of ownership with V2G revenue V2G revenue opportunities make EVs most costeffective option for urban delivery fleet with savings of 9 12% over ICE vehicles EV and PHEV fleets offer lower operating expenses for urban pickup and delivery services Fleet managers with flexibility around time they can commence operations should explore V2G opportunities May 24 25, 2011 MIT SCM ResearchFest 14 7
Thank you for your time! May 24 25, 2011 MIT SCM ResearchFest 15 8