Detroit project explores selling EV power to grid

DETROIT -- NextEnergy of Detroit has begun ordering expensive test equipment for the technology equivalent of a man-bites-dog story: a project that officials hope will help validate a promising component of the smart grid known as vehicle-to-grid electrification.

NextEnergy is a nonprofit company that is a combination of tech incubator and service provider for emerging energy-related companies.

By now everyone is familiar with the idea of an electric vehicle plugging into an outlet to recharge. But vehicle-to-grid electrification flips that around:

If components and communication systems between car and grid evolve as planned, owners of electric vehicles will be able to generate income to offset the premium they pay for their cars by selling power back to utility companies at times of peak usage.

In April, the nonprofit Institute of Electrical and Electronics Engineers and SAE International signed a memo of understanding calling for the two organizations to agree on future national standards for vehicle-to-grid electrification.

NextEnergy has agreed to help develop those national standards. This spring NextEnergy will begin testing components and cars in a building adjacent to its Detroit headquarters that houses what is called a microgrid that is already hooked up to DTE Energy.

"This could be a way to have a market subsidy," said Gary Gauthier, NextEnergy's director of business development. "This isn't near-term. We need to get the OEMs involved. Realistically, it'll be three to five years before we even have small-scale operations up and running.

The theory is similar to that used in the past by utility companies that used electricity to pump water to the top of a tower at night, when electricity demand -- and prices -- were low, then released the water to run a generator during peak demand periods in the daytime. That process used more electricity than it created but made economic sense because the utility was buying low and selling high.

Similarly, the owner of an electric vehicle could charge the car with cheap electricity -- either at night or, perhaps, by using solar panels on the garage roof -- and then sell power back to the grid when demand, and prices, were high.

There are drawbacks. For example, battery life is reduced by charging and discharging. Will EV owners really embrace selling juice back to the grid if it means they have to replace their batteries after six years instead of 10?

And while the national grid can handle the increased electric demands of having 100,000 EVs on the road, even a few EVs charging in neighboring garages can put a strain on the local grid in some locations. Whether the local and national grids, as they exist now, can deal with thousands or hundreds of thousands of vehicles charging and discharging remains to be proven.

According to a forecast in November by Pike Research, 100,000 vehicles could be feeding power back into the national grid by 2017.

Some energy prognostications see the vehicle-to-grid idea as much ado about nothing; others see a revolution in power generation in coming decades that will help free us from dependence on oil.

A 2010 report by the Institute of Electrical and Electronics Engineers called vehicle-to-grid technology "the most promising opportunity in electrical vehicle adoption," but said that "due to certain technical and economical issues, it is still less likely to become a reality in the short term."

The report also referred to a study that estimated a potential return to electric vehicle owners on the California power grid of $3,038 to $5,038 per year.

Meanwhile, Willett Kempton, director of the Center for Carbon-free Power Integration at the University of Delaware, serves as a one-man proof of concept. He set up his electrified Scion to feed power back to the grid in 2009 and claims earnings of about $300 a month since then.

Marc Spitzer, a member of the Federal Energy Regulatory Commission, which regulates interstate transmission of electricity, told a conference in Boston that "vehicle-to-grid is, I believe, the salvation of the automotive industry in the United States."

Both Gauthier and Ron Gardhouse, NextEnergy's CEO, say Spitzer wildly overstates the case in terms of the auto industry. But they see huge economic potential.

"If this is going to happen, Detroit should own it," said Gardhouse, who said the long-range plan for NextEnergy is to help Michigan companies become suppliers of components and equipment needed to make vehicle-to-grid electrification commonplace.

"We need to work with the utilities and the auto companies to prove that there's a business case to be made," said Gauthier. "Does this work? Can there be a business there? Can you get enough money flowing for it to make sense?"

Gauthier said one of the Detroit 3, which he did not have permission to identify, has agreed to provide vehicles, and others may as well. He said he has had talks with DTE and expects a formal partnership.

He said the project will be funded in part by the Michigan Economic Development Corp. and in part by grants the nonprofit will be seeking from the U.S. Department of Energy and the Department of Defense.

Gardhouse said that with enough funding the project could expand to fill all six bays in the microgrid building. The cost of the two-bay phase one will approach $2 million, he said.

He said NextEnergy will also work on inductive charging, a system where cars don't need to plug in but are charged wirelessly just by parking over a floor fitted with the proper equipment.

"Plugging in is eventually going to be old fashioned," said Gauthier.

If vehicle-to-grid electrification becomes a reality, a likely model is for a company known as an aggregator to work on behalf of utility companies to line up owners of electric vehicles. It will also require substantially more penetration by EVs into the new-car market, said Gauthier.

Meanwhile, NextEnergy has ordered a $500,000 piece of equipment known as a dual bi-directional charging model to serve as the guts of the two-bay station the nonprofit hopes to have on line by the end of May. He said the bays will test different types of charging systems, new batteries as they evolve and systems operating at different voltages and frequencies.

The car-to-grid model becomes more realistic as the cost of solar panels falls.

As more electric cars get recharged from renewable sources such as solar energy, the return to their owners when they sell electricity back to the grid will be higher than if they are just selling back electricity to the power company that they bought earlier at slightly lower rates.

James B. Treece contributed to this report