We examine the potential economic implications of
using vehicle batteries to store grid electricity generated at off-peak
hours for off-vehicle use during peak hours. Hourly electricity prices in
three U.S. cities were used to arrive at daily profit values, while the
economic losses associated with battery degradation were calculated based
on data collected from A123 Systems LiFePO4/Graphite cells tested under
combined driving and off-vehicle electricity utilization. For a 16 kWh
vehicle battery pack, the maximum annual profit with perfect market
information and no battery degradation cost ranged from ~$140 to $250 in
the three cities. If the measured battery degradation is applied, however,
the maximum annual profit (if battery pack replacement costs fall to
$5,000 for a 16 kWh battery) decreases to ~$10-$120. It appears unlikely
that these profits alone will provide sufficient incentive to the vehicle
owner to use the battery pack for electricity storage and later
off-vehicle use. We also estimate grid net social welfare benefits from
avoiding the construction and use of peaking generators that may accrue to
the owner, finding that these are similar in magnitude to the energy
arbitrage profit.