Full disclosure: I retained a small position in $PTRA in my Roth IRA. Disclaimer: I'm not a financial advisor. Do your own DD as always.
I want to start a discussion on V2G as I think it has reached the turning point in commercialization of V2G tech and its unique but perfect marriage with electric school bus.
What is V2G:
V2G or Vehicle-to-Grid is using electric vehicle specially equipped with bidirectional charging to take energy from the grid when the cost is low such as overnight and selling the energy back to the grid during peak hours when the electric cost is highest. It is important that the EV has a lot of energy left, ie: short routes and mostly unused hours/days. School buses have short routes, spend most of the day not in use and have many months without service particularly in the Summer assuming 180 days in a typical school year. Most electric vehicles can't do V2G. For example, not only my Tesla can't do bidirectional charging due to limitation, even if it could there just isn't enough 'juice' left to sell back to the grid at the end of the day because of high mileage.
Successful use of V2G in commercial settings:
Thomas Built Buses just announced a long term agreement to 2025 with Highland Electric to sell a fleet of the electric bus Saf-T-Liner C2 Jouley powered by Proterra's 226kWh battery and drivetrain. The 226kWh battery is the largest in the industry for school buses and has the capacity that is more than 16 times that of a Tesla Powerwall battery. This agreement is expanding on their previous fleet order of 326 electric bus in February of 2021 after Highland spent the past year successfully confirming that it is profitable using V2G on the Jouley electric school bus. Highland estimated that a single bus generated roughly $10,000 for the company over the course of the summer performing V2G. Highland will finance the purchase of the electric bus fleet, charge the Jouley bus overnight when cost is cheapest, have the school districts pay on subscriptions for just the miles driven, then sell the leftover energy back to the grid during peak hours when the cost is highest. Highland would take care of all maintenance and charging infrastructure. Highland Electric is a company that was created for the sole purpose of commercializing V2G in electric school buses. It's doing this for profit. The result came back so promising that it resulted in them opening their order book for more.
Why is this important:
Having a working business model where it is profitable to buy an electric school bus vs diesel is a game changer. An electric school bus is no longer viewed as just a novelty transport but as a stack of 16 Tesla Powerwalls that just happen to also earn transport income. Cost has always been the biggest hurdle in transitioning from 480,000 diesel school buses to electric. Electric school bus is often priced $120,000-$200,000 higher than its comparable diesel school bus. I'm fully aware of the few billions in funding for new electric school buses in a use-it-or-lose-it mandate and the touted $10,000 or so per year savings on fuel and maintenance. But unless the upfront cost comes down to the same level as diesel, I don't see many of those diesel getting phased out to electric. Having companies like Highland Electric take on the upfront cost and the associated long term risk would get transition to electric sped up and on a massive scale. The fact that Highland found long term, V2G not only make up the difference in $120,000-$200,000 cost difference but actually turning a profit from it is extremely intriguing. Now, for the same amount of money, school districts can get 3 electric school buses instead of 1 by having Highland maximizing the full potential of these powerful batteries instead of having them waste away in the parking lot in down time.
More companies want in on V2G:
Aside from Thomas Built Buses long-term partnership using Proterra's 226kWH battery and drivetrain with Highland Electric, a number of other companies are taking advantage of the working V2G & electric school bus model.
– Dominion Energy selected Thomas Built's Jouley electric bus with its 226 kWh Proterra battery for V2G (source). Dominion plans to add 200 buses per years for the next 5 years.
– On a smaller scale, Alaskan Energy and DTE Energy both selected the Jouley electric bus to study and obtain their own data on V2G.
– Blue Bird will provide Nuvve with electric school bus equipped with 155 kWh battery (source)
– BYD just released a small electric school bus with 150 kWh battery with V2G tech but no partners yet(source). BYD might have a difficult time getting partners as BYD is being blacklisted by US government from using tax money.
Most updated list of Utility V2G pilot programs (3/14/22): link
Minimal battery degradation from V2G over 10 years:
“In the case of frequency regulation and peak load shaving V2G grid services offered 2 hours each day, battery wear remains minimal even if this grid service is offered every day over the vehicle lifetime.”
“Frequency regulation and peak load shaving at power rates typical for vehicle charging and discharging will not significantly accelerate battery degradation in comparison to the degradation incurred from driving and calendar aging. Even in the ”extreme” cases in which we assume all EVs provide grid services from 7:00pm-9:00pm every day for ten years, the capacity losses from frequency regulation and peak load shaving only increase by 3.62% and 5.6%, respectively.”
Source: Quantifying electric vehicle battery degradation from driving vs. vehicle-to-grid services
FYI for potential investors:
– Proterra (PTRA) produces battery and drivetrain for Thomas Built Buses as well as other heavy-duty commercial companies. Proterra will have its 3rd and massive 327,000 square foot EV battery factory up and running in the 2nd half of 2022. Proterra also builds electric transit buses.
– Thomas Built Buses is the oldest American bus manufacturer and is owned by Daimler. Daimler Truck is an investor in Proterra.
– Lion Electric (LEV) is a Canadian company and it builds electric school buses among other large commercial vehicles. Lion Electric will have its new $70 million US manufacturing plant completed late 2022.
– Nuvve (NVVE) specializes in V2G platform and is more of an EV charging company.
The size of the pie(480,000) is so large that no single company can eat it all. Even if everyone gets just 1% of that pie or 4,800 school buses, at $500/kWh average price for battery and a 226 kWH battery, a company like Proterra would be looking at revenue of $542M for the battery alone. Proterra already locked up a stable supply of high-grade Nickel battery cells with LG Energy Solution through 2028.
To conclude, I believe the fact that our electricity infrastructure being far from perfect is what makes V2G profitable. I'm excited at the potential of V2G opening the door to a massive and untapped market of electrification of 480,000 school buses.
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