On September 10, China’s National Development and Reform Commission (NDRC) issued a joint notice with several government agencies, bringing fresh focus to the “vehicle-to-grid” (V2G) initiative.
V2G, the concept of electric vehicles doubling as mobile power banks, allows these vehicles to send stored energy back to the grid during power shortages, stabilizing electricity supply in key regions.
The notice emphasized the need to expand the scale of V2G projects, rapidly explore scalable commercial models, and use market forces to drive V2G toward large scale development.
The latest directive aims to ramp up V2G’s presence by encouraging larger projects, piloting commercial models, and leaning on market dynamics to drive development. Provinces are expected to select pilot cities, with at least five cities participating and 50 V2G projects kicking off. The notice didn’t just lay out targets—it called for time-of-use (TOU) electricity pricing, urging over 60% of annual charging to happen during off-peak hours, with private stations expected to exceed 80%. Each pilot project should offer no less than 500 kilowatts of combined discharge power, ensuring an annual discharge of at least 100,000 kilowatt-hours.
This initiative demonstrates the government’s strong determination to bring V2G to life.
However, V2G is not a new concept. The idea dates back to the 1990s, and experimental verification began as early as 2001. Over the years, countries like those in Europe, the US, and China have been actively promoting its development, with some automakers already producing vehicles capable of bidirectional charging.
The Mobility House has listed several car models in 2023 that support bidirectional charging. Among Chinese manufacturers, BYD’s Yuan Plus as well as Tang and Han series support V2G, and brands like MG, Nio, and Ora also have models with this capability.
According to industry insiders, V2G is currently in a rapid development phase. While the technology is no longer a major issue, there are still challenges to achieving widespread adoption. Despite years of development and increasing interest from capital markets, why hasn’t V2G yet been widely implemented?
The challenges in promoting V2G
The push for V2G stems from one undeniable fact: it’s an expensive proposition.
Yang Ye, vice chairman of battery technology company Aulton, estimated that building a basic battery swap station could cost between RMB 3–5 million (USD 420,000–700,000)—without factoring in battery costs. With batteries priced at RMB 60,000 (USD 8,400) for a 50-kWh capacity, stocking a station with the necessary 26–60 battery packs could raise the cost by another RMB 1.5–3.6 million (USD 210,000–504,000).
Total costs land somewhere between RMB 4.5–8.6 million (USD 630,000–1.2 million), and that’s before considering construction and expansion fees. Scaling this across a city involves considerable investment—dozens of stations would need to be built to create a functional network.
On top of the steep costs, there’s the question of grid compatibility. Liu Yuankun, founder of VppTech, explained that, while low-voltage distribution networks may handle V2G well, larger 220-kilovolt substations in urban centers face restrictions due to current grid management practices. V2G’s grid integration requires upgrades to manage large-scale power feeding, but the existing infrastructure isn’t quite there yet.
For V2G to succeed, standardization is crucial. Today’s charging protocols and communication interfaces are fragmented, making it difficult for different systems to communicate seamlessly. Open standards, secure communication, and reliable encryption protocols are all necessary to make V2G work at scale. Moreover, V2G requires a robust framework for secure communication between EVs, charging stations, and the grid—a task that involves heavy investment in cybersecurity to prevent unauthorized access to energy systems.
Even with costs reduced and technology streamlined, one key question remains: will car owners actually participate?
A common worry about V2G is the toll it might take on battery lifespan. Frequent charging and discharging, some fear, could shorten how long EV batteries last. However, studies suggest that after more than 200 full charge and discharge cycles, most vehicle batteries still retain over 93% of their original capacity (based on 100% depth of discharge). It’s a promising figure, but the real key to longevity lies in smart management strategies that can optimize battery performance and reduce wear.
Some EV owners already benefit from this system. Promotional materials from 36Kr indicate that owners regularly participating in V2G have earned more than RMB 10,000 (USD 1,400) over three years. After factoring in charging costs, that translates to an annual net income of around RMB 1,300 (USD 182), enough to cover charging expenses on a recurring basis.
But while these numbers sound promising, the reality isn’t always so simple. A recent V2G trial conducted by a video blogger revealed some of the frustrations. After discharging 13.8 kWh over 45 minutes, the total earnings were less than RMB 10 (USD 1.4). For many, such small rewards hardly justify the effort—especially when they might need their vehicle unexpectedly.
Interestingly, financial incentives alone might not be enough to sway most EV owners. A survey of 4,000 electricity consumers across Spain, France, Italy, and Denmark revealed that personal values played a far bigger role in their willingness to adopt V2G. While financially sensitive owners were motivated by monetary gain, those with strong environmental or altruistic values showed a much higher likelihood of embracing V2G, regardless of compensation.
In China, this creates a mixed scenario. On one hand, relying on price differentials may not be as effective in driving adoption. On the other hand, China’s collectivist culture, with its emphasis on the common good, could prove a powerful motivator in getting widespread support for V2G.
Why V2G matters
The hurdles facing V2G are undeniable—if the technology were easy to implement, China and other countries would already be beyond the pilot stage and moving into full-scale commercialization. So why keep pushing?
The answer may lie in the skyrocketing demand for electricity.
Since the start of summer this year, China’s electricity consumption has shattered records. Provinces like Guangdong, Guangxi, Yunnan, Guizhou, and Hainan have seen unprecedented surges in demand, with 21 cities hitting new all-time highs. And this isn’t just a seasonal issue—data from the NDRC shows that from January to May, power consumption across China rose by 8.6% year-on-year. Residential, industrial, and commercial sectors all posted notable increases, with power usage climbing 9.9%, 9.7%, and 7.2%, respectively.
The US is also feeling the strain. In 2021, winter storms caused blackouts across Texas, Arkansas, Illinois, and Kentucky, leaving over 5.5 million households without power and causing dozens of fatalities. As extreme weather becomes more frequent, grid demand will only rise. The North American Electric Reliability Corporation (NERC) forecasts that winter peak power demand will jump by 11.6% between 2024 and 2033, with summer demand not far behind at 9.2%.
There are two key forces driving this increase: the growing intensity of extreme weather and the rapid expansion of energy-hungry industries like AI and EVs. In China, for example, hotter, longer summers are driving up demand for cooling. The China Electric Power Research Institute (CEPRI) reports that cooling now accounts for 30–40% of peak summer electricity load.
At the same time, energy-intensive industries are booming. In Northern Virginia’s “Data Center Alley,” the world’s largest cluster of internet servers, peak power demand doubled between 2018 and 2022, hitting 2,767 megawatts. AI’s rise is adding further pressure—large AI applications are driving power densities of 50–100 kW per server rack, ten times the density of standard centers. The energy demands of AI infrastructure are accelerating faster than many grid systems can handle.
So why not just expand the grid to meet these growing needs? While that may sound like a straightforward solution, it’s neither cost-effective nor efficient. Industry experts estimate that China’s grid operates above 95% of peak load for fewer than 50 hours each year. Meeting this sporadic demand spike would require installing new peak power plants or expanding transmission infrastructure—both of which come with high marginal costs.
V2G, by contrast, offers a flexible, decentralized solution. By harnessing the collective energy storage capacity of EVs, V2G can alleviate pressure on the grid during these peak hours without requiring massive investments in new infrastructure.
V2G isn’t just about filling temporary gaps in power. According to researchers from Tsinghua Sichuan Energy Internet Research Institute, by 2035, private EV users in China could provide 150 million kW of mobile energy storage capacity, saving society about RMB 1 trillion in electricity investments.
China’s confidence in promoting V2G also stems from its status as the world leader in EV ownership. As of June 2024, China had 24.72 million new energy vehicles, accounting for more than half of the global total.
CEPRI’s Li Jianfeng estimates that, by 2040, China will have 300 million EVs. If passenger vehicles adopt 15 kW bidirectional charging stations, their total power support capacity will reach 290–350 million kW, equivalent to about 50% of the country’s total energy capacity derived from non-fossil fuel sources.
Still, the stakes go beyond saving money or even optimizing energy. In 2014, a power outage in Henan left a hospital without electricity for 20 minutes, resulting in the death of a 77-year-old man on a respirator. In 2022, during another blackout, an elderly person in rural Sichuan died from heat exhaustion while holding an unplugged fan. In cases like these, had V2G stations been available, lives could have been saved.
This article was written by Zhai Fangxue and was originally published by 36Kr.
