In Depth: China’s Vision for Batteries on Wheels

Electric vehicles (EVs), known primarily for their clean-driving capabilities, have the potential to serve broader energy functions within city infrastructure. Urban planners see EVs as power batteries on wheels that can support electricity grids by transferring stored energy during high-demand periods—this is the premise of the "vehicle-to-grid" (V2G) system [para. 1][para. 2][para. 3]. In this concept, EVs charge during times of surplus energy and discharge back to the grid during peak hours, supported by a coordinated "virtual" power plant, which could significantly aid in the transition away from fossil fuels [para. 3].

The implementation of V2G requires designing systems that incentivize car owners to participate, covering inconveniences and additional wear on their vehicles. For instance, in a media showcase at a Nio charging station in Shanghai, an EV was shown to discharge its battery back into the grid using a 20-kilowatt (kW) bidirectional charging pile. In return, the driver earned credits worth 0.8 yuan (approximately 11 U.S. cents) per kilowatt-hour (kWh) [para. 4][para. 5]. The system's effectiveness would be enhanced if grid subsidies were more substantial.

The V2G system has garnered official support through guidelines from the National Development and Reform Commission, National Energy Administration, and two other state-level agencies. These guidelines outline scaling pilot projects in at least five cities and establishing technical standards by 2025, with broader application projected by 2030 [para. 6][para. 7]. Local governments, such as those in Anhui province and Chongqing municipality, are actively rolling out their pilot projects in response [para. 8].

China’s increasing demand for new-energy vehicles (NEVs), with over 50% of July vehicle sales being EVs or plug-in hybrids, underscores the urgency and opportunity behind the V2G concept [para. 9]. However, few current vehicles can reverse charge, and retrofitting existing models would be costly. Large-scale adoption could be controversial among owners concerned about battery longevity [para. 9][para. 10].

Shenzhen is a leader in V2G technology, with a notable pilot involving 53 NEVs discharging power back to the local grid in exchange for credits. The city's power coordination system, or “virtual power plant,” manages power supply and storage across various entities, including EVs and charging stations [para. 12][para. 14]. If all NEVs in Shenzhen had reverse-charging capabilities, they could provide an energy storage potential of 50 gigawatt-hours (GWh), akin to five medium-sized coal-fired power plants [para. 17].

Despite the potential, EV manufacturers show reluctance towards V2G, citing high costs and an unclear business model. Few companies aside from Nio and BYD are promoting the technology, primarily because it requires significant hardware and software upgrades, such as inverters and bidirectional charging piles [para. 24]. Consumer concerns also play a role, with many worried about the impact of reverse-charging on battery lifespan [para. 25][para. 26]. Technical breakthroughs are needed to extend battery life to at least 3,000 cycles, according to the guidelines released in January [para. 26][para. 27].

Efforts are underway among grid operators and car manufacturers like BYD and Nio to develop two-way charging EVs and enhance battery warranties. By 2025, pilot projects are set for at least five cities, focusing on examining the system’s technical and commercial feasibility [para. 28][para. 30].

Looking ahead, experts envision EVs participating in electricity trading markets, offering frequency regulation services, and reducing charging costs. Although Nio has begun such services in Denmark, China's complicated provincial trading rules make this a distant prospect domestically [para. 35][para. 38]. The government and operators must enhance the grid's capacity and efficiently distribute power from EVs to realize these opportunities fully [para. 38][para. 39].