Research Projects and Publications

Exploring Electric Vehicle Participation in the Icelandic Balancing Market as Virtual Power Plant

Economics, Policy and Business Power Systems and Smart Grids Show all

Author: Fritz Steingrube

Year: 2017

Supervisors: Ewa L. Carlson, Hlynur Stefánsson & Samuel Perkin


The electrification of the transport sector has been named one of the key measures to mitigate the global CO2 emissions. Especially in countries with a large share of renewable energy technologies in the national energy mix, increased market penetration of electric vehicles (EV) offers a lot of potential to curb CO2 and other emissions. With increased roll-out of EVs, further opportunities for generating additional benefit for various parties can be explored. For example, EV batteries can act as electricity storage on a large scale. Thus, the participation of EV fleets in electricity markets, selling these battery capacities, offers interesting new possibilities. Especially the provision of balancing energy through vehicle-to-grid (V2G) technology has been identified as a market with large potential for EV owners and fleets, enabling them to potentially accumulate profits from participation.

This research presents a case study of Iceland, since no such research on this matter has been conducted for the local conditions. Due to the Icelandic energy mix, there is lot of potential to effectively reduce CO2 and other emissions by further increasing the share of EVs in their fleet. Thus, creating additional financial incentives for vehicle owners by marketing the vehicle's battery storage capacity in the balancing market could further promote electric vehicles in Iceland. This research therefore sets out to determine if it is possible for a fleet of EVs to compete in the Iceland balancing market. To secure the minimum bid size for participation and ensure the availability of the bid capacity throughout a balancing period the entire fleet is centrally managed and acts as a Virtual Power Plant (VPP) in the market.

An agent based simulation was run to determine the viability of an EV-VPP in an Icelandic setting. It modeled the driving behavior of Icelandic drivers in the capital city region and balancing market, relying on Icelandic data. The results show that a VPP of EV batteries can in fact participate successfully in the balancing market. Both participating vehicle owners and the VPP operator can accumulate minor profits. Vehicle owners profit most through the provision of free charging while the VPP operator benefits primarily from the submission of unsuccessful bids and cheaper battery packs. These results also indicate that the performance of a VPP in the Icelandic balancing market is highly sensitive to the adjustment of specific parameters, inter alia the battery pack costs, minimum bid size for market participation or the electricity retail price.

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