Zpryme is a leading market research provider in smart grid, and I invited them to prepare this article to highlight the key findings from their new report on Vehicle-to-Grid. The report can be downloaded at no charge from their website or directly from our portal. Further details are in article.

More than 400,000 gallons of oil have spread to over 170 square miles of water off the coast of Dalian, China. Civilian volunteers and firefighters are struggling to clean it up using bare hands and plastic bags before the spill reaches international waters. By comparison, the Deepwater Horizon oil spill spewed 94 million to 184 million gallons covering at least 44,000 square miles of the Gulf of Mexico. The outlook for the clean-up remains hopeful although it illustrates the similarities between energy-hungry giants like China and the U.S. and college binge drinkers; there are very few societal consequences for overindulgence.

China consumed the equivalent of 2.3 billion tons of oil in 2009, according to the International Energy Agency (IEA), and is expected to demand the equivalent of 2.8 billion tons of oil by 2015. While China consumes roughly half the amount of oil as the U.S., it uses more than three times as much coal.

The growth of China’s energy demand is far more remarkable than the fact that, almost overnight, China overtook the U.S. as the world’s greatest energy consumer. On a per capita basis, the US consumes five times as much energy as China, but the projected growth rate of Chinese demand for energy and its sheer scale signal that the global energy market is on the precipice of a revolution.

Since China surpassed the U.S. as the world's largest emitter of carbon-dioxide and other greenhouse gases in 2007, it’s been ramping up its strategies to reduce its reliance on oil and coal. On July 20, the National Energy Administration (NEA) announced its investment of 5 trillion yuan ($738 billion) in alternative energy sources in order to meet its carbon emissions goal by 2020. $60 to $100 billion of these funds will be allocated to its Smart-Grid to help the nation more effectively monitor its energy use. State Grid, a Chinese state-owned electric power transmission and distribution enterprise, plans to invest $3.7 billion in its smart grid network this year. Zpryme predicted that China would lead in smart grid federal stimulus investments for 2010, and now the country has made it a national priority for its future.

State Grid also plans to install 75 electric car-charging stations and over 6,000 recharging towers across 27 cities this year for electric vehicles (EVs). Today, only 2.8% of Chinese own a car compared with 60% of Americans, however China was the world’s largest automobile market in 2009. China's rapidly expanding middle class, especially outside urban areas, provides evidence of strong demand for energy efficient vehicles in the near future. "China going electric decreases the price of EVs for everyone,” said CEO Shai Agassi of a Better Place, a company devoted to the development of networks and services for EVs. Currently, the Chinese government offers a $7,300 incentive to consumers who purchase EVs, which hasn’t yet significantly impacted sales.

Perhaps the ability to store energy efficiently for use later or to sell it back to the grid will be more of a stimulus for consumers than a cash kick-back. Vehicle-to-Grid (V2G) technology is the “smart grid” solution for the automobile sector by allowing vehicles to connect, communicate, and sell demand services to the grid. China is the leader of electric bikes and lithium ion battery manufacturing, which means the Chinese are more likely to become early adopters of electric vehicles and readily understand the benefits of V2G. The Chinese V2G vehicle market value is projected to grow to $6.5 billion by 2020, according to recently released ZigBee Alliance sponsored V2G Report by Zpryme.

Shares of BYD, the Chinese company known for selling the world’s first mass produced plug-in hybrid vehicles to individual buyers, are now trading for 40% lower than three months ago despite Warren Buffet’s stake in the company. According to China Economic Review, the lack of infrastructure to charge vehicles and the costly, unreliable batteries are responsible for BYD's failure to meet investor expectations.

Although the market for V2G is in its infancy stage, the technology is expected to revolutionize the driving experience like the internet changed the way of interacting with the world. Pike Research (News - Alert) projects that more than 4.7 million Electric Vehicle Charge Points will be installed by 2015 and Asian manufacturers will lead the $8 billion market for EV batteries. According to the V2G report by Zpryme, the global V2G market is expected to reach $26.6 billion by 2020 with a growth rate of more than 50% from 2015 to 2020.

It appears the greatest threat to the preservation of our earth isn’t oil spills or carbon emissions but the limits of the mind. Christine Hertzog, CEO of Smart Grid Library, reminds us in her interview with Zpryme that “once upon a time, people had to learn how to manage an internal combustion engine (ICE) car instead of a horse,” and explains how the success of EVs is contingent on consumer education. EV users are not far from earning money by selling back electricity to the grid at peak times, and companies should present this information effectively to provide incentives for early adopters who want financial compensation for going electric.

China’s oil spill is a reminder that history will continue to repeat itself until consumers understand the value of the alternative; Vehicle-to-grid solutions will soon become the staple of our energy-rich diets and we won't have to feel guilty about overindulgence.

For more information, please write to Zpryme at smart.grid@zpryme.com, subject-line: “Smart Grid Insights.”