Energy 224 (2021) 120108

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Energy
journal homepage: www.elsevier.com/locate/energy

Benefits of electric vehicles integrating into power grid

Wei Wu a, Boqiang Lin a, b, *
a
School of Management, China Institute for Studies in Energy Policy, Collaborative Innovation Center for Energy Economics and Energy Policy, Xiamen
University, Fujian, 361005, China
b
Innovation Laboratory for Sciences and Technologies of Energy Materials of Fujian Province (IKKEM), Xiamen, Fujian 361101, PR China

a r t i c l e i n f o a b s t r a c t

Article history: Electric vehicles play an essential role in low carbon development and have significant implications for
Received 22 August 2020 the power grid. The purpose of this study is to examine the economic value of electric vehicle integrating
Received in revised form into the power grid. An electricity supply cost model is established to investigate the cost reduction
4 February 2021
under three charging operation modes, including random charging, controlled charging, and V2G
Accepted 11 February 2021
Available online 16 February 2021
charging. The results reveal that the adoption of EVs can effectively improve the power grid's load factor
and reduce the electricity supply cost. Under the random charging mode, the marginal electricity cost is
556.5 CNY/MWh, which is lower than the grid's power supply cost of 597.1 yuan/MWh. The controlled
Keywords:
Electric vehicle
charging without V2G can further smooth the load curve and drop the power supply cost to be 495.2
Charging mode CNY/MWh. In the V2G model, the grid revenue is complicated with the consideration of battery
Power grid degradation costs and the optimal total revenue could be 148.4 million CNY. The main policy implication
Electricity supply cost is that the government should deregulate the electricity market and allow electric vehicles to participate
Load curve in the electricity market as a power source.
© 2021 Elsevier Ltd. All rights reserved.

1. Introduction electric vehicles in 2019 has reached 4.68%. Moreover, according to

Since 2009, China has surpassed the United States and becoming
the world's largest vehicle production and sales market [1]. How-
ever, the rapid growth of vehicle ownership has also brought some
issues such as energy security risk [2], environmental pollution [3],
and rising carbon emissions [4]. As [5] indicated, the transport
sector is more difficult to reduce carbon emission than other sec-
tors. The adoption of electric vehicle (EV) is considered a solution
for the above dilemmas [6].
China's government has launched series of encouragement
policies to promote the penetration of EVs [7], which include
financial subsidy, R&D investment, travel privileges, and tax con-
cessions [8e10]. The EV market has also achieved spectacular
growth with the support of these policies. As listed in Table 1, sales
of electric vehicles increased from 0.013 million in 2012 to 1.26
million in 2018, an increase of nearly 100 times. Although in 2019,
electric vehicle sales declined due to a sharp reduction in EV sub-
sidies and depression in the whole vehicle market, the market
share of EV has maintained an upward trend, and the proportion of
* Corresponding author.
E-mail address: bqlin@xmu.edu.cn (B. Lin).
the ambitious planning of government, EV sales may reach 2
million in 2020 and 5 million in 2025 [11].
The increase in the penetration rate of electric vehicles will also
affect the power system. On the power supply side, electric vehicles
can bring positive externalities for renewable energy integration
[12]. As [13,14] indicated, EV can significantly support renewable
fluctuation and reduce the externalities cost of renewable energy in
the electricity system. On the demand side, the integration of
electric vehicles into the power system will flat the power grid's
load curve, and then affect the power supply cost [15,16].
Nowadays, China's power grid is facing some challenges. With
the adjustment of economic structure and the improvement of
living standards, the proportion of electricity consumption by res-
idents and the tertiary industry has continued to increase, leading
to deterioration in the grid load curve and driven up the power
supply costs. Furthermore, China's government proposed a 10%
reduction in the average price of electricity for industrial and
commercial companies continuously in 2018 and 2019, which is
reducing the profit of the power grid.
The development of electric vehicles offers the power gird an
opportunity to improve the load factor and cut down the operation
cost. However, there are few literatures that focus on the impact of
electric vehicles on China's power grid operating costs from the city

https://doi.org/10.1016/j.energy.2021.120108
0360-5442/© 2021 Elsevier Ltd. All rights reserved.
W. Wu and B. Lin Energy 224 (2021) 120108

Nomenclature EES Shifted electricity volume (MWh)

EFg Gasoline vehicle energy efficient (%)
d Battery degradation rate EFe Electricity vehicle energy efficient (%)
ε Proportion of EV participating in controlled charging f ðPowÞ Annual load factor of the marginal power capacity (%)
mode (%) l Grid load without EV (MW)
h Line loss rate (%) l Maximum load (MW)
hES EV energy storage system efficient (%) lEES Load involved in peak V2G (MW)
k Cycle that has been carried out lEV EV charging load (MW)
leg Substitution factor between electricity and gasoline loEV Optimal EV charging load (MW)
t Proportion of electric vehicles (%) lEVd Highest charging load for the day (MW)
C0 Initial capacity of the battery (MWh) ln Grid load with EV (MW)
Cdeg Battery degradation cost (CNY)
ln Maximum grid load with EV (MW)
CEVL Cost of charging/discharging energy loss (CNY)
MC Marginal cost of adding electricity consumption
Cfeed in Electricity purchase cost (CNY)
(CNY/MWh)
Cgf Government fund (CNY)
Pbat Battery price (CNY/kWh)
Ck Remaining available capacity of the battery at cycle k
Pdeg Unit degradation cost (CNY/kWh)
(MWh)
Pfeed in Average feed-in tariff (CNY/MWh)
Cline loss Line loss cost (CNY)
Pow Power capacity of gird (MW)
Cretail Retail electricity cost (CNY)
Qe Electricity heat value (MJ/kWh)
CT&D T&D cost (CNY)
Qg Gasoline heat value (MJ/L)
CPgrid Capacity payment (kCNY.MW
1.year
1)
TECg Total energy consumption of gasoline vehicle (MJ)
DCT&D Variation of T&D cost (CNY)
V Ownership scale of private vehicle
E Regional electricity consumption (MWh)

level, and the discussion on EV charging business model is also engine vehicles, it has not received widespread attention until
insufficient. In addition, the battery capacity will degrade in the recent years with technological progress and cost reduction [17]. To
V2G process, but the consideration for degradation cost lacks in data, some researches focus on the charging strategies EVs and the
current studies. The motivation of this study is to explore the potential impact on the power grid.
impact of the electric vehicles on power supply cost in China, which For the power grid, EV's integration can improve system effi-
is the world's largest electric vehicle market and electricity market. ciency [18] and defer investments in grid capacity expansion [16].
The potential contributions of the study are as follows. 1) A power [19] proposed the load management of EVs can shift peak load to
supply cost model is established. Based on the load curve and off-peak periods and improve the load factor [20]. pointed out that
composition of electricity of a case city, the capacity cost is evalu- the improper setup of charging stations will deteriorate the utility
ated, which can be further used to evaluate the value of EV inte- distribution system and proposed optimal planning of charging
gration. 2) The marginal power supply cost of power grid station infrastructure for an Indian city [21]. and [22] evaluated the
integration with EV is assessed. The evaluation process considers optimal charging schedule and location of the charging station.
three modes of random charging, controlled charging, and V2G, They proved that a proper operation and distribution of charging
and measured the marginal power supply cost and the variation of could reduce electricity cost, flatten the load curve, and enhance
the grid load factor under different EV penetration rates. Especially, the gird stability [23]. figured out that the uncoordinated PEV
the battery degradation cost is integrated into the model to eval- charging could significantly change the resident electricity demand
uate the vehicle to grid mode. curve even at low proportion levels [15]. proposed a double-layer
The remainder of this paper is organized as follows: Section 2 supervision strategy and found the adoption of EVs can smooth
reviews the literature on EV charging strategies and their impact the daily electricity demand curve. However some studies indi-
on the grid. Section 3 describes the methodology of electricity cated that the random charging mode of EV may potentially
supply cost and the model of grid connected electric vehicle. Sec- weaken the reliability of the power system [24]. [25] proposed that
tion 4 presents the simulation result. Section 5 discusses the result. the “peak on peak” effect may cause severe grid instabilities when
Section 6 concludes and discusses the policy implications. integration EV [26]. pointed out that the increased peak loads
produced by EV charging may bring grid stability challenges.
2. Literature review The charging strategies play an essential role in the power
system [27]. found that the bidirectional charging of V2G has the
Though the EVs started long ago before internal combustion potential to reduce peak demand on a residential reduce up to 40%
further than unidirectional charging [28]. investigated the impact
Table 1
of different electric vehicle charging strategies on spot market
EV sales and proportion in China.
power prices and found that the V2G mode can significantly
Year EV sales (Million) Vehicle sales (Million) EV proportion smooth the spot price [29]. studied the price-responsive charging
2012 0.013 19.306 0.066% in conjunction with real-time retail price and revealed that the
2013 0.018 21.984 0.080% consumer energy costs could decline more than 75% when com-
2014 0.075 23.492 0.318%
bined with rooftop solar [14]. presented a novel grid technique and
2015 0.331 24.598 1.346%
2016 0.507 28.028 1.808% evaluated the impact of proposed charging strategy on the electric
2017 0.777 28.879 2.691% load curve. The result revealed that flexible G2V and V2G services
2018 1.256 28.081 4.474% should be provided. Meanwhile, as [30,31] indicated, the electric
2019 1.206 25.769 4.680% vehicle can play a crucial role in the electricity ancillary service

2
W. Wu and B. Lin Energy 224 (2021) 120108

market. However, the battery degradation cost is the most sensitive
factor when providing ancillary services [32]. [33] proposed a V2G
scheme that considers the battery lifetime degradation into the
V2G optimization.
3. Methodology
3.1. Market background
In China, the State Grid Corporation of China (SGCC) monopo-
lized the market of the most region, and the China Southern Grid
Corporation (CSGC) dominated the rest market in southern China
[34]. The electricity transmission and distribution (T&D) process is
often thought of as a natural monopoly industry, where the electric
supply is more efficient by monopoly firms under government
regulation [35].
In China, the retail electric price is regulated by the government
and contains three components: feed-in tariff, T&D prices, line loss,
and government fund [36]. The feed-in tariff is the price the power
generators sell electricity to the power grid, which provides a fixed
price for the power generators considering the cost of different
power technologies. The T&D price is the cost of electricity trans-
mission and distribution, which is designed to cover the power
grid's operation cost. The line loss is the cost of electricity loss in the
T&D process. Although the new electricity market reform launched
in 2015 attempts to relax the electric price regulation (Huang et al.,
2019), the feed-in tariff and the T&D price are still determined by
the government. Under the existing mechanism, the retail price for
the household sector, general industrial and commercial sector is
also conducted a fixed price mode, which without considering the
real-time cost of electricity.
Although the cost fluctuations of electricity are internalization
by the grid companies, the development of electric vehicles will
have an impact on the power supply cost of the grid and may in-
fluence the final retail electricity price level.
3.2. Electric supply cost model
Referring to the previous studies of [34]; we construct a power
supply cost model. The electricity retail cost can be decomposed
into four parts as represented by Eq. (1). The first component is the
electricity purchase cost Cfeed in , which is the sum of the feed-in
tariff that considers the composition of electricity generate. The
second item is the line loss cost Cline loss . The third component CT&D
is the T&D price, which is the payment for the power grid and
regulated by the government. The fourth item is the government
fund Cgf , which can be considered cross-subsidies for different
power sources. The cross-subsidies are from one generator to the
other, so the government funds can be zero for the overall elec-
tricity market.
loss is also a composition of electricity supply cost and needs to be
included in the retail price. The line loss cost can be expressed by
Eq. (3).
.
Cline loss ¼ Pfeed in *E*h ð1
hÞ (3)
T&D price involves the investment and operation cost of power
gird. In some markets, the T&D price is treated as the capacity
payment, which implies that the T&D price is a linear function of
power load capacity [37]. Here we refer to the method of [34,38]
and assume that the T&D cost is the product of maximum load l and
capacity payment CPgrid .
CT&D ¼ l*CPgrid (4)
The l is the annual max load for the power grid, and presented
by Eq. (5).
l ¼ supflðtÞg t ¼ 1; 2; /8760 (5)
Based on the above, the capacity payment can be deduced as Eq.
(6).
h . i.
CPgrid ¼ Cretail
Pfeed in E ð1
hÞ l (6)
3.3. Grid-connected electric vehicle
Although electric vehicles are considered to have the ability to
improve the operating efficiency of the power system [18] and
defer investments in grid capacity expansion [16], some research
indicated that the random charging mode of EV might potentially
weaken the reliability of the power system [24]. Here we refer to
the research of [39,40] and category the charging operation mode
into three types, as shown in Table 2.
3.3.1. Impact of EV charging on power load and electric supply cost
The impact on the power grid of charging operation modes is
different. For the random charging mode, the EV user may charge at
the time they wanted. However, the charging load is not really
random. Some studies, such as [41e43]; and [44]; have pointed out
that the charging load of electric vehicles has periodic character-
istics and also has peak-to-valley characteristics. When electric
vehicles participate in the power system, the power supply cost will
be affected by two aspects.
On the one hand, the max load may increase and adding the
capacity payment (T&D cost). The power grid load can be updated
as Eq. (7), where lEV is the charging load of EV and ln is the gird load
with the EV charging demand.

Cretail ¼ Cfeed in þ Cline loss þ CT&D þ Cgf (1) ln ðtÞ ¼ lðtÞ þ lEV ðtÞ t ¼ 1; 2; /8760 (7)
The feed-in tariff is regulated by the government and imple- When the maximum load increases, the T&D cost will rise as
ments the mechanism of a fixed price. Hence, as Eq. (2) presents, shown in Eq. (8) where ln is the updated maximum load with EV
the electricity purchase cost of the power grid is equal to the charging (Eq. (9)).
product of the average feed-in tariff Pfeed in and the volume of retail
 
power E. DCT&D ¼ ln
l CPgrid (8)

Cfeed in ¼ Pfeed in *E (2)

ln ¼ supfln ðtÞg t ¼ 1; 2; /8760 (9)
The line loss is the power loss during the T&D process. When the
line loss rate is h, for one unit of electricity generated on the supply On the other hand, the EV charging will drive up the peak de-
side, only ð1
hÞ unit power can be used on the demand side. Line mand. After integrating the EV, the final electricity cost increment

3
W. Wu and B. Lin Energy 224 (2021) 120108

Table 2
The settings of charging operation mode.

Charging mode EV load Controllability Description

Random charging Load Uncontrolled The EV charging time is not limited. The EV owner can charge at any time they wanted
Controlled charging Load Controlled The power system operator optimally dispatches the charging schedule and load of the EV
Vehicle to Grid charging Load/EES Controlled V2G enables the EV as batteries and acts as storage devices that supply power during peak demand in the grid.

can be summarized by Eq. (10), and the electricity demand for EV the load is equal to the maximum decrease of other times of the
charging can be described by Eq. (11). day. The item lEVd represents the highest charging load for the day.

X
8760
ð1
εÞlEV ðtÞ  loEV ðtÞ  lEV ðtÞ þ εlEVd ðtÞ (16)
DCretail ¼ lEV ðtÞPfeed in ð1 þ hÞ þ DCT&D (10)
t¼1 In controlled charging without V2G mode, the charging is uni-
directional. That is, EV is only connected to the grid as load, but not
X
8760 as power supply to the grid. Therefore, the constraints for the load
EEV ¼ lEV ðtÞ (11) need to be supplemented as Eq. (17).
t¼1

When conducting the economic analysis, it's essential to know 0  loEV ðtÞ (17)
the marginal cost of adding consumption. For the EV electricity
consumption, the marginal cost can be calculated by Eq. (12).

MC ¼ vCretail =vEEV (12) 3.3.3. V2G charging

The above formula shows the marginal cost calculation method
in the differential form. Section 3.3.4 will introduce that the current
interval of the electricity market data we have obtained is 1 h.
Therefore, the marginal cost of electricity can also be organized as
Eq. (13). In the equation, the item Pow represents the power ca-
pacity of the grid, the item f ðPowÞ represents the annual load factor
of the marginal power capacity, and f ðPowÞ*8760 is the annual
utilization hours of the marginal power capacity.
. cost Pdeg (Eq. (19)). The unit degradation cost is the battery
MCðPowÞ ¼ CPgrid ðf ðPowÞ * 8760Þ þ Pfeed in *ð1 þ hÞ (13)
3.3.2. Controlled charging
In the controlled charging mode, the charging load can be
optimized according to the power grid operation condition. The
optimal charging mode should minimal the retail electricity cost
The V2G technology enables a bidirectional flow of electricity
from the grid to the car and back [45]. Under the V2G charging
mode, the EV can be treated as an energy storage source, which can
be used for peak shaving and valley filling in the power grid [46].
The optimization problem needs to be modified to the form of Eq.
(18). The degradation of the battery needs to be considered in
vehicle modeling when the battery pack is to be used in V2G [47].
The item Cdeg depicts the battery degradation cost, which is the
product of shifted electricity volume EES and the unit degradation
degradation value per kWh discharged to the grid when the EV is
used in V2G mode. The item CEVL is the cost of charging/discharging
energy loss, as Eq. (20) expressed, where the hES is the loss ratio of
the EV energy storage.
X
8760
min
o
DCretail ¼ loEV ðtÞPfeed in ð1 þ hÞ þ DCT&D þ Cdeg þ CEVL
lEV
t¼1

and can be expressed by Eq. (14), where the decision variable is the (18)
optimal EV charging load loEV . The optimization of charging can only
shift the load at different time points, and the total power con- Cdeg ¼ EES Pdeg (19)
sumption has not changed. Besides, we assume that consumers can
accept a load shift within a day but cannot conduct day-to-day load CEVL ¼ EES Pfeed in hES (20)
transfer. The optimal process should subject the constraint as
described by Eq. (15). The electricity flow is bidirectional, so the charging load for the
EV can be positive or negative. When the proportion of EVs
X
8760 participating in V2G is ε, the optimal load can be illustrated by Eq.
min
o
DCretail ¼ loEV ðtÞPfeed in ð1 þ hÞ þ DCT&D (14) (21). The symbol lEES is the load involved in peak V2G.
lEV
t¼1

ð1
εÞlEV ðtÞ
lEES  loEV ðtÞ  lEV ðtÞ þ εlEVd ðtÞ þ lEES (21)
d þ23
TX d þ23
TX
loEV ðtÞ ¼ lEV ðtÞ Td ¼ 1; 1 þ 1*24; /; 1 þ 364*24 To evaluate the unit degradation cost, we refer to the method of
t¼Td t¼Td [48] to construct the battery degradation model. The relationship
(15) between the available capacity of the battery and the service con-
dition can be described by Eq. (22), where k is the cycle that has
It needs to be considered that not all of the electric vehicles will been carried out, d is the battery degradation rate, C0 is the initial
participate in controlled charging. We assume that the proportion capacity of the battery, and Ck is the remaining available capacity of
of electric vehicles participating in controlled charging mode is ε,
the battery at cycle k.
the loads at different times should also observe the constraints of
the following formula. The left hand of the formula indicates that at k
Ck ¼ d C0 (22)
any one time, the load can be reduced at most ε proportion. The
right hand of the formula indicates that the maximum increase of When a battery has reached the end of life (when the remaining

4
W. Wu and B. Lin
Fig. 1. Probability density and cumulative density of 1-h power grid load.
capacity has dropped below 50% of the rated capacity), Eq. (23) can
assess the corresponding cycles. The unit degradation cost can be
estimated according to the cumulative usage of the battery, which
is presented by Eq. (24).
kr ¼ lnðCk = C0 Þ=lnðdÞ
X
Pdeg Ck ¼ Pbat
k
3.3.4. Data summary
Based on data availability considerations, we select Xiamen, a
city in southeastern China, as a case study. The case data set con-
tains 8760 h of load data. In 2018, Xiamen's electricity consumption
was 26.96 TWh, which is comparable to Ireland's electricity con-
sumption. The vehicle ownership in 2018 is 1.32 million. Excluding
motorcycles and trucks, the number of private cars is 1.11 million.
Fig. 1 illustrates the probability density and cumulative distribution
characteristic of the electricity load in a typical year. The probability
density curve is approximate to the normal distribution, which
implies that most of the load is concentrated in the range around
the mean. The cumulative distribution further reveals the imbal-
ance of the load distribution. For example, when the normalized
load is 0.8, the cumulative distribution function's value is 93.1%,
which means that the time when the load exceeds 80% of the
maximum load is only 6.9% of the whole year. Since the power
infrastructure is designed according to the highest load throughout
the year, the grid capacity is under low utilization for most of the
year.
The charging load data is from the China Urban Transportation
Report (CUTR), which is published by the Baidu Map.1 As illustrated
in Fig. 2, there are two charging peaks in one day. One is 0: 00e2:
00 at night and the other is 12: 00e14: 00 during the day. Both peak
loads appear at rest time. Additionally, the two valley loads appear
at 6:00 and 18:00, corresponding to the peak traffic hour. According
to the CUTR report, the average charge order is 30 kWh. Based on
the energy consumption of most electric vehicles, the average
charge volume per time can cover a full range of 150 kme200 km.
The average duration of each order is 1.25 h. Based on the charging
volume and charging duration, it can be calculated that the average
1
https://jiaotong.baidu.com/reports.
Energy 224 (2021) 120108
(23)
(24)
Fig. 2. Typical EV charging load curve.
charging power is 24kw.
The data of feed-in tariff, T&D payment, and line loss is from the
electricity price supervision report published by Ref. [49]. For the
unit degradation cost of EV battery [50], and [34] evaluated the
degradation cost as 1CNY/kWh based on a battery cost of 350 USD/
kWh. The degradation cost calculated in our results is 1.039 yuan/
kWh when the battery cost is 350 USD/kWh, which is close to the
value of previous literature. Meanwhile, the price of vehicle power
batteries has been declining in recent years. According to the
annual report of Contemporary Amperex Technology Limited
(CATL), the world's largest vehicle power battery manufacturer, the
cost of power batteries in 2018 has dropped to 200USD/kWh.
Therefore, we adjusted the degradation cost accordingly.2
At present, most of the private vehicles sold in China are gaso-
line vehicles, so the substitution of electric vehicles with gasoline
vehicles means substituting electricity with gasoline. Therefore, we
calculated the conversion factors for gasoline and electric vehicles
based on the research of [51] and then estimate the electric-
gasoline substitution factor according to the heat value of “Gen-
eral Principles For Calculating Comprehensive Energy
2
The annual report of CATL can be downloaded from http://www.cninfo.com.cn/
new/index. We convert the currency unit from USD to CNY in the calculation, and
the exchange rate is 6.5 CNY/USD.
5
W. Wu and B. Lin Energy 224 (2021) 120108

Consumption” [52]. The substitution factor leg can be calculated by

Eq. (25), where Qg is the heat value of gasoline, Qe is the heat value
of electricity, EFg is the energy efficient of gasoline vehicle, and EFe
is the energy efficient of EV.
  
leg ¼ Qg EFg ðQe = EFe Þ (25)

According to the annual vehicle kilometers traveled (VKT) dis-

tance data of [53]; the annual energy consumption of gasoline
vehicle (ECg ) and electricity vehicle (ECe ) can be estimated by Eq.
(26) and Eq. (27).

ECg ¼ VKT*EFg Qg (26)

ECe ¼ VKT*EFe =Qe (27)

If the proportion of electric vehicles is t, then the consumption
of gasoline and electricity can be calculated by Eq. (28) and Eq. (29),
where TECg is the total energy consumption of gasoline vehicle,
TECe is the total energy consumption of electric vehicle, V is the
ownership scale of private vehicle.

TECg ¼ ð1
tÞV*ECg (28)

TECe ¼ tV*ECe (29)

4. Result

The main parameters of the model and the estimated result of

the capacity payment are summarized in Table 3. From the results,
we can see that if the grid's load capacity increases 1 MW, the
annual cost will increase 823.988 thousand CNY, which implies that
controlled charging and V2G operating modes have the potential to
gain profit. Additionally, the annual electricity consumption per EV
is 2126.667 kWh. Combined with electric vehicle ownership, it can
be found that for every 1% increase in the proportion of electric Fig. 3. Simulation results of controlled charging without V2G.
vehicles, the electricity consumption will increase by 23.65 GWh,
which accounts for 0.09% of the annual electricity consumption.
Fig. 3 illustrated the simulation result of controlled charging capacity payment cost. The controlled charging mode can shift part
mode. The point where the x-axis is 0 corresponds to the result in of the charging demand under the power grid’ peak period to flat
the uncontrolled charging mode. It can be seen from Fig. 3-(a) that and valley periods, thereby reducing the electricity cost. Hence, as
the marginal electricity cost is 556.5 CNY/MWh under the uncon- the proportion of EVs participating in controlled charging in-
trolled charging mode, which is lower than the grid's power supply creases, the marginal cost and total electricity cost for EVs are
cost of 597.1 yuan/MWh. The reason for this result is that the load decreasing. In the condition that the proportion of controlled
peak inconsistency between the EV charging and the power grid charging without V2G achieves 50%, the marginal cost of electricity
demand. Part of EV charging load can be satisfied by the idle ca- can drop to 495.2 CNY/MWh, which is 17.1% lower than the original
pacity of the power grid and improve the load factor of power grid. grid supply cost.
However, in the peak load period, there is also a charging de- As described by Fig. 3-(b), the application of EV can improve the
mand for EV. The “peak to peak” effect will also increase the power grid’ s load curve. The grid load curve at the point where
controlled charge proportion is equal to 0 corresponds to the
random charging mode. Under the random charging mode, the
Table 3 increase in the proportion of electric vehicles can also significantly
Parameter and result summary.
increase the power grid's load factor. This implies that the electric
Variable Unit Value Variable Unit Value vehicle's load curve superposition and the grid load curve can
Pfeed in CNY/MWh 419.36 leg kWh/L 2.050 promote the load factor. Moreover, with the controlled charging
PT&D CNY/MWh 163.20 Qg MJ/L 29.500 proportion increase, the charging demand at the peak period of the
h % 3.360 Qe MJ/kWh 3.6 power grid can be transfer to the off-peak period, and the load
E TWh/year 26.959 VKT km/year 12000 factor can be further improved. With the increase of EV penetration
f ðPowÞ % 57.640 V Millions of vehicles 1.112
levels, the load can be further improved. For the scenario that EV
Pdeg CNY/MWh 0.594 ECg L/year 1037.288
Pbat CNY/KWh 200*6.5 ECe kWh/year 2126.667
proportion achieve 100% and the controlled charge proportion is
hES % 0.866 CPgrid CNY/(MW.Year) 823988 50%, the grid load factor will increase from the initial value 57.6%e
EFg MJ/km 2.550 CT&D Million CNY/Year 393.073 60.7%.
EFe MJ/km 0.638 d e 0.71(1/1500) Fig. 3-(c) illustrate the revenue from EV charging, which is the

6
W. Wu and B. Lin Energy 224 (2021) 120108

product of cost reduction and electric vehicle power consumption.

It can be concluded that when the proportion of controlled
charging is 50% and the proportion of electric vehicles is between
10% and 100%, the total revenue of grid integrated electric vehicles
is between 24.1 million and 241 million.
In the V2G charging mode, EV can be used as energy storage
systems to discharge at the period of grid load peaks. Here we as-
sume that only a part of EVs participates in V2G, and the remaining
EVs still adopt the random charging mode. The simulation results of
the V2G charging mode is illustrated by Fig. 4. From the marginal
cost, it can be found that when the proportion of electric vehicles is
low, the higher the proportion of participating in V2G, the lower
the marginal cost. The mechanism is that V2G can achieve benefits
by reducing the cost of grid capacity. However, as the proportion of
electric vehicles increases, the revenue of V2G declines. The mar-
ginal cost contains the battery degradation cost. In some cases, the
marginal cost is higher than the initial power supply cost. This
implies that when considering the benefits of reducing capacity
costs, it is also necessary to balance the rise in recession costs. For
the load factor, as the proportion of EV increases, or the proportion
Fig. 5. Comparison of load curves in random charging.
of EV participating in V2G increases, the load factor will rise. This
shows that V2G can effectively smooth the fluctuations of power
demand. The revenue simulation result shows that when EV ac- improvement of idle capacity utilization.
count for a high proportion and the proportion of EV participating In the controlled charging mode, the charging load for the EV at
in V2G is low, the benefits of saving grid costs are the highest, the grid peak period can be shifted to the off-peak period. As
which could be 148.4 million CNY. It is not that the higher the illustrated by Fig. 6, the load in the period of 19:00e13:00 is
proportion of V2G, the higher the total revenue. The main reason is
that V2G also needs to consider the attenuation cost of the battery.
An excessively high proportion of V2G may cause the degradation
cost to rise faster than the load improvement benefit, and negative
revenues may even occur under certain conditions.

5. Discussion

5.1. Load curve transformation

According to the results, with the integration of EV, the marginal

cost is lower than the original power supply cost of the grid. The
mechanism of cost reduction is different under each charging
mode.
For the random charging mode, the low cost mainly benefits
from the difference in the load curve. As shown in Fig. 5, the load
curve of EV charging is different from the grid's load curve. The
peak load of EV charging appears at 1:00 and 13:00, which corre-
sponds to the power grid's off-peak period. The peak load of
‘Grid þ EV load’ is lower than the grid's peak load plus the peak load
of EV charging. The power system can benefit from the
Fig. 6. Comparison of load curves in controlled charging without V2G.

Fig. 4. Simulation results of V2G charging mode.

7
W. Wu and B. Lin Energy 224 (2021) 120108

smooth, and the peak load is lower than that of Fig. 5. The operation
efficiency can be further improved compared with random
charging mode, and the marginal cost of electricity can be declined
with the enhance of controlled charging proportion.
Under the V2G mode, some of the EV can play as power gen-
eration. As shown in Fig. 7, the V2G load can be negative in the peak
period and positive in the off-peak period. The peak of ‘Grid þ EV
load’ is lower than the grid load, which implies that EV participa-
tion in the power system can further benefit from reducing overall
grid capacity payments.

5.2. Sensitivity analysis

Considering that the result might be sensitive to the values of

the model parameters, we further conducted a sensitivity analysis.
The changes in four variables are considered, which include Elec-
tricity consumption per EV (S1), EV battery degradation cost (S2),
Private vehicle ownership (S3) and T&D price (S4). Fig. 8 summa-
rizes the result, where the high scenario represents a 10% increase
in the variable, and the low scenario represents a 10% decrease in
the variable. From the results, it can be found that under different
charging modes, changes in transmission and distribution price will
have a significant impact on revenue.

5.3. Business model

Under now, though we have evaluated the revenue of different
charging modes, the income distribution mechanism is still unclear.
Here we discuss the business model of the revenue distribution.
In the random charging mode, there is no need for the power
grid to transfer payments to car owners. Therefore, all the benefits
of electric vehicle charging can be obtained from the grid. However,
to encourage the development of electric vehicles, the government
Fig. 8. Result of sensitivity analysis.
can regulate the grid to lower the charging prices of electric
vehicles.
In the controlled charging mode, the power grid needs to
require car owners to adjust their own charging mode, so a part of
the revenue needs to be transferred to car owners to provide in-
centives. The final power grid gains should be higher than random
charging gains but lower than the total gains of controlled charging.
In the V2G mode, the power grid's revenue selection is similar to
controlled charging. However, it is necessary to ensure that the
compensation received by the vehicle owner is higher than the cost
of battery degradation.

6. Conclusion and policy implication

Electric vehicle is not only important for the issues of energy

security and climate change, but also for power systems. In this
research, one of China's city is selected as a research case. By
establishing an electricity supply cost model, and based on the
city's power grid load curve, the effects of different electric vehicle
charging modes on power supply costs and load characteristics are
studied. The mechanism for the marginal cost reduction is also
discussed. The main results suggest that:

(1) In the random charging mode, electric vehicles can reduce

the cost of power supply and improve the load factor of the
power grid. The reason is that the load curve of the electric
vehicle is different from the power grid's load curve of the
power grid, and the electric vehicle can partially utilize the
idle capacity of the power grid. The power supply cost of
random charging is 556.5CNY/MWh, which is lower than the
average power supply cost of the power grid.
(2) Under the controlled charging mode without V2G, the power
cost can be further improved, and the load factor can also be
improved. This is due to the controlled charging that can shift
the charging load at the peak of the grid load to off-peak
Fig. 7. Comparison of load curves in controlled charging with V2G. hours, which improves the operating efficiency of the
8
W. Wu and B. Lin
power system. When 50% of electric vehicles participate in
controlled charging, the cost of power supply can be reduced
to 495.2CNY/MWh, which is 17.1% lower than the current
average power supply cost. As the penetration level of elec-
tric vehicles enhanced, the load characteristics of the grid
will continue to improve.
(3) The V2G mode can significantly improve the load factor of
the power grid, and the power supply costs could be decline.
Though the improvement of EV penetration will elevate the
load factor, the revenue may be more complicated. That is,
due to there is battery degradation cost in the V2G mode, it
needs to weigh the relationship between rising costs and
falling power supply costs and choose an optimal V2G scale.
The results of this paper can help us understand the value of EVs
for power systems in China. Some valuable suggestions can be
proposed for the policymakers and the power grid operators. The
main policy implications of this paper are listed as follows:
First, the adoption of EV can reduce the electricity supply cost.
However, the current price of electricity is still regulated by the
government, and this positive externality cannot be internalized
through the market mechanism. This may restrict the development
of electric vehicles. Although China's power system reforms are
intended to liberalize the power market gradually, the capacity
payment of the power grid is still regulated under the current re-
form framework. The policy should improve the flexible mecha-
nism for capacity payment in the future.
Second, in V2G mode, the electric vehicle undertakes the
functions of a distributed energy storage system. However, under
the existing power system, electric vehicles are not allowed to play
the role of power generation, which implies that the V2G charging
mode cannot be implemented in the power market. Hence, the
power system needs to be changed, and relax restrictions on
electric vehicles as power sources. In addition, the V2G charging
mode requires the infrastructure to support the bidirectional AC-
DC current exchange, but most existing charging infrastructures
only support unidirectional charging mode. The current EV policy
focus has changed from EV purchase subsidies to infrastructure
subsidies.
Third, although the application of electric vehicles can bring
benefits to the grid, it still needs a well-designed business model to
motivate the adoption of optimal charging mode. Grid companies
should transfer part of their revenue to car owners to encourage the
application of controlled charging and V2G mode to achieve Pareto
improvement.
Although this paper selects a city in China as a research case, the
framework is scalable to address the similar issues in other regions
of China if the load curve is available. Our future research will be
expanded in two directions. On the one hand, the results of this
study are based on the status quo of China's electricity market.
However, China is now implementing the reform of the electric
power system, the electricity feed-in tariff electricity mechanism
may be modified, and wholesale market prices will be liberalized.
The model of this paper can be extended to further study the effect
of EV under the electric reform circumstance. On the other hand, as
another important component of the future urban energy system,
the distributed photovoltaics has not been considered. In the next
step, we plan to take distributed photovoltaic into consideration
and analyze the optimal coupling mode of electric vehicles,
distributed photovoltaic, and power systems.
Credit author statement
Wei Wu: Conceptualization, Methodology, Software, Writing e
original draft, Writing e review & editing, Boqiang Lin: Supervision,
9
Energy 224 (2021) 120108
Writing e original draft.
Declaration of competing interest
The authors declare that they have no known competing
financial interests or personal relationships that could have
appeared to influence the work reported in this paper.
Acknowledgements
The paper is supported by Science and Technology Projects of
Innovation Laboratory for Sciences and Technologies of Energy
Materials of Fujian Province (IKKEM) in China (No. RD20200
60101)，the MOE (Ministry of Education in China) Project of Hu-
manities and Social Sciences (No. 20YJC790148) and the Funda-
mental Research Funds for the Central Universities in China (No:
20720201019).
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