EVs and platforms aggregating the supply of flexible charging capacity can enable changes in the load patterns of EVs that shift power demand away from the system demand peaks is given in Box 5.4.

Box 5.4. Fostering EV participation in electricity markets through aggregation: an example from the Netherlands

The potential for EVs to participate in electricity markets and being exposed to market prices is underway, with smart charging of EVs and platforms aggregating the supply of flexible charging capacity as a means to balance the grid in place in several countries. The figure in Box 5.4 shows an example where the charging capacity of 1 000 EV charging sessions in the Netherlands were pooled by an aggregator, Jedlix, and responded to price signals. This resulted in a significant change in the pattern of power draw to charge EVs to off-peak hours, in comparison with 1 000 charging sessions not subject to the price signals (ElaadNL and Jedlix, 2019). Relative to the average household electricity demand, smart charging shifts to hours with lower demand. On a national scale, 30-50% of charging sessions in the Netherlands occur in the evening peak hours (16:00-20:00), while cars are parked four-times longer than the required charging time, allowing for time to shift the charging sessions to off-peak times.

Regular and smart EV charging patterns from 1 000 simultaneous sessions compared with average hourly household demand in the Netherlands

Sources: ElaadNL and Jedlix (2019); NEDU (2018); Refa and Hubbers (2019).

Importance of policy actions to enable EV participation in markets

Despite the early participation of aggregated EVs in a small number of markets and smart meter deployment (a key prerequisite for DSR) that has grown rapidly in recent years, the situation is not homogeneous globally. In the majority of countries, power markets are not developed to a point that can optimally accommodate increased EV uptake, since demandside resources are only able to participate in a small number of programmes (Smart Energy Demand Coalition, 2017). Achieving large-scale flexibility from EVs around the world will require that power markets evolve. Three prerequisites must be in place to enable participation:

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•First, the market must include the presence of services (e.g. grid balancing) suitable for EV participation.

•Second, the market must allow the participation of small loads through aggregators. This

includes the existence of legal frameworks that define the participation of EVs and other electrical devices into aggregated DSR.51

•Third, and perhaps most importantly, aggregators should not face high transaction costs to be able to pool large number of small loads to participate in demand response in an electricity market.

These are the three broad principles adopted by the European Union with the update of the directive on common rules for the internal market in electricity, adopted in March 2019 by the European Parliament as part of the Clean Energy for All Europeans package (European Parliament, 2019).52

Table 5.4 illustrates different levels of grid integration and links to the changes needed in the regulatory environment and electricity market reforms, outlining what they mean for EVs. Controlled single direction charging alone (level 2) is expected to unlock a major flexibility potential. Bi-directional (level 3/vehicle-to-home or level 4/vehicle-to-home) is expected to further increase the value of the flexibility services offered by EVs, as they increase the possibilities for EVs to access a wider pool of flexibility incentives.

Altogether, the opportunities offered by EVs and the potential to enhance power system flexibility to facilitate VRE integration suggests that EVs can help to accelerate the energy transition pathways that extend beyond the decarbonisation of the transport sector.

Table 5.4. Grid integration of EVs, and regulatory and market requirements

51The presence of a legal framework to define the rules that apply to electricity market that rewards flexibility is crucial to clarify aspects such as the conditions that apply to consumers that opt for dynamic electricity price and conclude aggregation contracts.

52The directive urges member states, among others, to empower energy consumers to get access to electricity markets and perform DSR activities. Demand response is seen as pivotal to enable the smart charging of EVs and thereby enable the efficient integration of EVs into electricity grids. It also urges states to enable dynamic electricity price contracts and to allow more flexibility, including an appropriate electricity market design, to accommodate an increasing share of renewable energy in the grid. Member states must also ensure that participation of DSR through aggregation is allowed and fostered, and that all customers are free to purchase and sell electricity services, including aggregation.

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