Residential V2G in the GB Energy market - a look under the hood at the new PowerPack Tariff from Octopus

Octopus Energy in the UK recently announced a new tariff that offers free EV charging to their customers in exchange for the EV owner allowing Octopus to optimise the charging and discharge behaviour of the vehicle. 

That’s a pretty big deal, as having a big energy supplier launch this kind of tariff is a major step on the road to V2G hitting the mainstream.

The basic idea is this: Octopus Energy is exposed to the highly variable costs of the GB wholesale energy markets and by having access to a customer’s EV battery they can use that energy storage as a way to generate greater revenues, or more euphemistically “to balance charging and discharging when it’s best for the grid”, which is how they put it. 

Simplistically, this happens through charging the EV (aka buying energy) when wholesale prices are lower and discharging via V2G (aka selling energy) when energy prices are higher. 

In their press release, Octopus estimates the tariff could save the average EV driver over £850 per year, but they can only offer that kind of deal at scale if it also works for them, so we spun up a Gridcog model to explore how this might look from Octopus’s perspective. The deal they’ve announced has a few caveats related to vehicle use but the qualification criteria seem pretty broad.

What did we model?

• A house in the UKPN London DNO area
• 7.4kW bi-directional Wallbox EV charger and a vehicle with a 40kWh battery
• The vehicle travels 10,000 miles per year, utilising no more than 333kWh per month and that is parked up for at least 12 hours every few days. In practice this means it utilised 54.1kWh of energy every week.
• We have used the Day Ahead market to model potential wholesale market returns from V2G.
• We compared the household charging this vehicle on the current Ofgem residential price cap. 

What did we learn?

The new V2G tariff looks like a great deal for consumers. It significantly outperforms charging the vehicle on the price cap. The goal here is V2G, so exporting power out of the MPAN, rather than using V2H to service the home’s load. For Octopus, this initially looks loss making to the tune of £47/customer/year. 

Why would they do this?

Although it looks like Octopus are making a small loss on this tariff utilising the Day Ahead market, they may see wider portfolio benefits for their generation and retail book through having access to flexible assets. The EVs doing V2G could act as an option for Octopus to manage their imbalance costs, which may arise from load or generation being significantly different to their day ahead forecast and potentially exposing them to volatile system prices. With an increasing penetration of renewables this imbalance cost will likely become more significant. For example, a change in weather forecast is more significant if there is more wind and solar and flexible assets such as batteries and electric vehicles can act as a hedge against this volatility. 

At Gridcog we’re excited to see V2G entering the consumer market. We think V2G is going to be a very big deal which is why we’ve built a range of features into our software to help clients model the impact of V2G in their eMobility projects.

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