Smart grid business model : V2G from a consumer perspective

S M A R T G R I D B U S I N E S S M O D E L :

V 2 G F R O M A C O N S U M E R

P E R S P E C T I V E

Student number: 10666397

University of Amsterdam, Faculty of Economics and Business Supervisor: René Bohnsack

Date:7th _{of August 2014}

Abstract: The car market is experiencing a real revolution, triggered by the penetration of EDVs in the automotive market. This research focuses on the implementation of the V2G concept, whereby EDVs act as mobile electricity plants. Current V2G business models failed to integrate consumer beliefs about the V2G concept. The Canvas Business Model is used as tool to develop a new business model based on consumer perspectives. The Integrated Behavior Model is used to form the theoretical basis for consumer intentions towards V2G. Findings present the recognized salient issues as: future savings, comfort, reliability and time management. Moreover it is seen that consumers prefer a V2H infrastructural framework and the energy supplier as aggregator. In addition, people who are highly innovative and have a high income are more interested in the use of V2G applications. A business model is proposed based on these findings. Further research can build and extend these finding towards a full integration of the V2G in the electric grid.

Keywords: Vehicle-to-grid, business models, Canvas Business Model, Integrated Behavior Model, consumer beliefs, aggregator, target group, V2G frameworks, electric driven cars, (dis)charge spots

1 TABLE OF CONTENTS

1 Table of contents ... 1-2

2 Introduction ... 2-4

3 Case background ... 3-6

3.3 Energy demand and ancillary services ... 3-7 3.4 EDV as a mobile electricity plant ... 3-8

4 Literature review ... 4-9

4.1 Business models ... 4-10

4.1.1 Canvas Business Model ... 4-10 4.1.2 Proposed frameworks within business models for V2G applications ... 4-12 4.1.2.1 Overview Vehicle-to-Grid frameworks ... 4-15 4.1.2.1.1 Vehicle to Home (V2H) ... 4-15 4.1.2.1.2 Vehicle to Building (V2B) ... 4-16 4.1.2.1.3 Vehicle to Community (V2C) ... 4-17

4.2 Consumer behavior ... 4-18

4.2.1 The Integrated Behavioral Model (IBM) ... 4-19 4.2.2 Consumer innovativeness ... 4-22 4.2.3 EDV beliefs ... 4-22 4.2.3.1 V2G costs and revenues ... 4-24 4.2.3.2 The Victorian study ... 4-27 4.2.3.3 Behavioral Variables ... 4-27

5 Methodology ... 5-30

5.1 Literature review and theory building ... 5-31 5.2 Survey ... 5-33 5.2.1 Sample description ... 5-34 5.2.1.1 Measures and variables ... 5-35 5.2.2 Conjoint analysis ... 5-37 5.2.2.1 Steps in survey ... 5-39

6 Results ... 6-40

7 Discussion ... 7-53

8 Conclusion ... 8-59

9 References ... 9-61

10 Appendix ... 10-68

2 INTRODUCTION

Over the years, clean energy, electric-drive vehicles (EDVs) and environmental issues have attracted increasing attention of industries, consumers and politicians. EDVs are widely regarded as one of the promising strategies to reduce the oil addiction and gas emissions. The need for an energy conversion is already started (Liu, Chau, Wu, & Gao, 2013).

Due to environmental advantages of EDVs over conventional transportation it is expected that the present efficiencies of this technology will progressively penetrate the automotive market. The car market is experiencing a real revolution, triggered by all kinds of EDVs. Still, there are significant technological and economic obstacles that need to be resolved (Peterson et al., 2010).

EDVs are capturing a bigger market share in the automotive industry every year. In addition to this, literature research is done on vehicle-to-grid (V2G) applications, under which the storage

capability of EDV batteries is used to deliver peak power or frequency regulation to support

applications in the current power systems. This can be extended to specific infrastructure capable of using EDV storage for grid services. V2G could be used as support for peak power, frequency regulation, ancillary services and power reserves.

With respect to the environmental advantages of EDVs over traditional transportation (i.e. fossil fuel dependent internal combustion engines), timing in charge behavior is important for electricity production. Analyzing consumer behavior is essential in the development of business models to create economic value for EDV businesses. Research with regard to this behavior has already been conducted, but needs to be extended towards analyzing the aspects that motivate consumers to use EDVs as mobile electricity plants.

Models for using EDVs as mobile electricity plants are already exploited (Kempton & Tomić, 2005b). Mainly, there are three models or frameworks for V2G: Home (V2H), Vehicle-to-Building (V2B) and Vehicle-to-Community (V2C). These frameworks based on new business models describe how EDVs can provide energy back to the grid as a mobile electricity plant. Current literature discusses business models that capture the economic value of EDVs for the end-user, i.e. selling the energy from EDVs. Topics mentioned in these business models that need further exploration are charging infrastructures, charging services, cost-benefit calculations and market positioning compared to conventional vehicles.

Until now, literature has failed to describe business models that aim to increase the use of EDVs as mobile electricity plant. How can consumers be motivated to use EDVs as mobile electricity plants? Exploration and exploitation of incentives is therefore necessary. Analyzing consumer

behavior will yield important information for developing and implementing these incentives. In this research a survey will be conducted that examines important factors governing consumer behavior. The most promising incentives for increasing the use of EDVs as mobile electricity plant will be

presented in this study.

Different types of business models for V2G applications are analyzed. Yet, in the literature there is not one particular business model for V2G that captures and integrates consumer behavior. This research will therefore integrate consumer behavior components in a V2G business model. The aim of this study is to develop a new business model based on beliefs of consumers. The new business model makes it interesting for consumers to use V2G applications. The research gap between

developing business models and persuading consumers to increase V2G usage leads to the research question of this thesis:

“How can V2G business models be designed to increase V2G usage?” This thesis furthermore includes a case background (Chapter 3), in which I provide a broader

understanding of the context for this research. The case background is followed by a literature review (Chapter 4), where I present an overview of previous literature about consumer behavior and business models with regard to EDVs as mobile electricity plants. I will use these theories/ideas extracted from the literature, complemented with a survey to develop a business model. By the use of a survey it is understand which consumer beliefs are important to increase the usage of EDVs as mobile electricity plants. In Chapter 5, I will describe the Methodology of the research design. This chapter explains how this research is conducted for answering the research question. The results are presented in Chapter 6, where I make a distinction between preliminary results, the main results and analysis of the results. In the discussion, Chapter 7, I will discuss the significance of the findings, placing them in the context of real-word practices. Research limitations will be given as well. In Chapter 8, I will provide conclusions with regard to my research questions, mention the research contributions and give suggestions for further research.

3 CASE BACKGROUND

In this chapter a description of electric-drive vehicles (EDVs) and their recent developments is presented. Concerns for global warming and climate change lead to the development and

implementation of incentives for the expansion of low emission vehicles (LEVs). Various topics are discussed, such as extra costs and ancillary services of current power systems to emphasize the interest in EDVs as future mobile electricity plants.

3.1 ELECTRIC-DRIVE VEHICLES

Although EDVs recently made a viable interesting technology development, the first EDV was invented in 1834. In the late 19th _{century some firms already produced EDVs. However, fossil}

combustion engines became popular in the early 20th century due to cost-efficiencies. Only recently have new technological improvements made it possible to use EDVs for commercial usage (Kley, Lerch, & Dallinger, 2011), mostly for small vehicles and short-distance aims.

EDVs are electric-drive motors powered by fuel cells, batteries or hybrid drivetrains. EDV or EV (electric vehicles) is the common name for the collection of these cars. The hybrid drivetrains are available in Plug-in Hybrid Electric Vehicles (PHEVs) and Hybrid Electric Vehicles (PEVs). EDVs are mostly an application of automobile engineering and electrical engineering. Optimization of energy for utilization of the EDVs is the main focus for the near future, e.g. better batteries and the use of lighter materials. In 2012 Tesla introduced the model S (Tesla Motors, 2014a). This is the first commercial EDV car that is capable of driving more than 200 km/h, having a range of 480 kilometers and priced at $70,000. Still, there are some major issues in the development of the EDVs to make the vehicles interesting for the general public (Chan, 2007). The three main issues are: battery management, charging facilities and costs. These three issues are rapidly becoming less problematic, but nevertheless internal combustion engine vehicles (ICEVs) are still the mainstream vehicles.

3.2 GLOBAL CO

EMISSIONS

Reducing CO2 emissions has a high priority on today’s leading agenda. These emissions are largely

the cause of the phenomenon ‘global warming’. Substantial sources of CO2 emissions are exhaust

gases produced by the present automotive industry. Nowadays there is more and broader evidence that over the past 30 years the increasing world’s extreme weather conditions are linked to global warming (Intergovernmental Panel on Climate Change, 2012). In the present automotive industry the most common source of energy is petroleum-derived fuels, resulting in relatively high CO2 emissions, (Chu

This global warming has led the automotive industry to produce low-emission vehicles (LEVs). Gas and oil prices are rising and public regulation, like tax incentives, are an impetus. In the automotive industry a lot of attention is given to the need for using more sustainable innovation coupled with low emission alternatives. Expert authors and car manufacturers are continuously looking for the best-adopted alternative fuel for the internal combustion engine (ICE) (Bohnsack, Pinkse, & Kolk, 2014). Especially electric, hybrid and fuel cell vehicles are seen as near-future low emission alternatives. These vehicles may lead to a significant decrease of CO2 emissions from fossil

fuels in the coming decades.

3.3 ENERGY DEMAND AND ANCILLARY SERVICES

Focusing on the world’s energy demand, the decline of fossil-derived energy (oil, gas, and coal) has sparked a continuous debate about finding solutions to fill the energy gap with renewable energy towards a sustainable energy future (International Energy Agency, 2011). Also, in 2035 the global demand for electricity will have increased from 20,043 hours in 2009 to 36,025 terawatt-hours, an increase of 79,7%.

While EDVs seem most promising to achieve efficient energy transportation, it will lift the costs for electricity significantly, possibly doubling the demand (Lior, 2010). Five to ten percent of total electricity costs are incurred by quick-response electric services, also called ancillary services. These services are for matching and balancing constant fluctuations in customer load, and for adaption in unexpected equipment failures (Kempton & Tomić, 2005a). The functions of ancillary services are: “generate, control, distribute and transmit electricity to support the basic services of generating capacity, energy supply and power delivery” (Hirst & Kirby, 1996, p.4). Ancillary services can be divided into four categories: regulation services, spinning reserves, peak power and base-load power (Kempton & Tomić, 2005a). Regulation services or frequency control is used to fine-tune the frequency and voltage of the grid by matching generation to load demand. Spinning reserves or extra generating capacity are used to provide power quickly within 10 minutes by demand of the grid. The generators are already synchronized to the grid and thus provide the necessary capacity to manage unplanned loss of energy load in time of operating services. Peak power is used at times when high level of power consumption is expected. This is typically generated by power plants. Base-load power is generated around-the-clock, typically sold with long-term based contracts for stable production at relatively low prices.

In summary, increasing electricity demands and concomitant costs needed to maintain

ancillary services will be higher in absolute numbers in the future. In the United States (US), ancillary services represent $12 billion per year or roughly about 10% of the overall total costs of energy services (Ackermann, Andersson, & Soder, 2000).

an interesting opportunity. Apparently, power systems are not able to operate 100% efficiently due to ancillary services. Previous studies done on these unbalanced electricity flows assume one thing very clearly: we are not able to store energy in the grid near the usage of electricity (Kempton & Tomić, 2005a). Because of lack of energy storage at the power grid (besides the 2.2% capacity in pumped storage), ancillary services are needed to match fluctuating customer load (demand) by continuously managing generation and transmission. This indicates that there are possibilities to increase efficiency when it comes to the usage of our energy.

3.4 EDV AS A MOBILE ELECTRICITY PLANT

In contrast with traditional energy supply from large generators (e.g. nuclear reactors), EDVs are designed to manage power fluctuations without such ancillary services. The driver regulates the power demand by using his feet, transferring power from the engine into the driving mechanisms. EDVs must have power storage to cater to the driver’s needs. Still, it is possible for the car to drive efficiently without energy loss, apart from friction and thermodynamic losses (Chu & Majumdar, 2012). In other words, the energy storage in the EDV supplies the energy that can be efficiently managed towards customer driving load within the electricity circuit of the EDV. This can be achieved without the use of ancillary services or any problems in balancing fluctuations in electricity load. Basically, then, EDVs are mobile electricity plants. This applies in particular when it is technically possible to transport the stored energy from the EDV for functions not related to the car, i.e. outside the electricity circuit of the EDV.

Cars are utilized for transportation only 4% of the time. In theory, this makes them available for secondary functions for the residual 96% of the time. EDVs are particularly interesting for secondary functions. According to several authors EDVs can even be complementary to the electric power grid (Kempton & Tomić, 2005a; Liu et al., 2013; Marnay, 2014; Sovacool & Hirsh, 2009, 2009; Tuttle, Fares, Baldick, & Webber, 2013). EDVs are able to store and generate electricity when parked. If the right connections are facilitated, it is possible to transfer this stored energy to the grid. This is called vehicle to grid (V2G) power. EDVs must have three elements to function in a V2G application: a communication or control device that allows grid operators to retrieve information from the battery, a power assembly to the electric grid, and precision metering on board the EDV to track energy flows (Sovacool & Hirsh, 2009). This smart or intelligent grid system with a two-way communication between the electricity grid and the EDV allow better management of electricity resources. For EDV owners, there is the additional advantage that they can make money by selling the energy to the grid. This is done by actively shifting the load charging for EDVs when demand is low and discharging the supplementing energy back to the grid when demand is high. The capital costs of vehicle power systems required to return energy back to the grid are relatively low compared to large generators. This would suggest market competitiveness. However, the durability of EDVs is low

compared to generators; about 1/50 of the design operating hours. Also, the costs of electric energy (in kilowatt-hour) for EDVs are higher than for large generators. Therefore, V2G power is only attractive for short-duration and high-value power markets, including peak power, regulation and spinning reserves (so not base-load power).

The above description of EDVs as mobile electricity plants implies an opportunity to capture value from this possibility. The possibility to use EDVs for balancing fluctuations of the customer load would exclude the costs of quick response services, but also brings new uncertainties.

Society, suppliers and consumers are in favor of adopting this opportunity. Consumers can use EDVs for transport and electricity plants. The transition from conventional vehicles to transportation with EDVs depends on many factors. The most important factor is that the consumers have to buy the EDVs. A precondition is that there must be a suitable infrastructure for using these cars. Cities need new policy plans for transportation, streets have to be reorganized for electric vehicle supply equipment (EVSE) and maintenance of the equipment is needed. Clearly EDVs have an extensive value to the electricity system (Kempton, Marra, Andersen, & Garcia-Valle, 2013), but capturing that value and persuading consumers to use EDVs as a mobile electricity plant is a complex issue.

Nevertheless, V2G applications are interesting because they present a mechanism to meet key supplies of the electric system as the EDVs are parked and underutilized.

4 LITERATURE REVIEW

Although the EDV industry already has a relatively long history, it has only recently drawn the interest of the broader public. Applications with EDVs are truly taking off. The application of EDVs as mobile electricity plants is discussed in the case background. Here, the literature on capturing value from this application and developing a business model to increase the usage of the V2G application will be described. In this respect, business models are important because they describe how consumers, the automotive industry and the energy industry can be interconnected to create economic value from V2G applications. Consumer behavior is crucial because it shows consumer acceptance and

willingness to use new business models. As there are various approaches to making V2G attractive, the purpose of this research is to find out, from a consumer perspective, which incentives within V2G business models are most promising. Ultimately, this may help to increase the usage of V2G

applications.

First, a business model tool, the Canvas Business Model, is described to identify which part of the business models this research is interested in. Secondly, several existing frameworks derived from business models are presented. These frameworks are helpful in understanding how the infrastructure of V2G can be developed. Thirdly, the Integrated Behavioral Model is introduced to conceptualize behavioral aspects towards the usage of V2G applications. Fourthly, person’s degree of innovativeness is explained as a determinant for the adoption of a new product. Finally, behavioral examples in the

EDV industry are presented, including cost-benefit calculations compared to fossil-driven vehicles. As example, the Victorian Trial study is used to examine practical contributions for V2G applications. Existing literature and studies are used to develop a survey. The survey will examine the most interesting business model, based on consumer beliefs, to increase V2G usage.

4.1 BUSINESS MODELS

Before business models are discussed, a definition of business models is given that shows what business models propose to do: “The essence of a business model is in defining the manner by which the enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit. It thus reflects management’s hypothesis about what customers want, how they want it, and how the enterprise can organize to best meet those needs, get paid for doing so, and make a profit” (Teece, 2010, p.172). Consistent with the definition of Teece (2010), the Canvas Business Model is introduced as a tool to implement business models from a consumer perspective

(Osterwalder & Pigneur, 2010). The Canvas Business Model explains how value is created for organizations by creation, provision and preservation. Subsequently, promising frameworks in current literature with regards to V2G applications are presented.

4.1.1 CANVAS BUSINESS MODEL

The Canvas Business Model introduces 9 components for creating a successful business model (Osterwalder & Pigneur, 2010). These components are: customer segments, value proposition, customer relationships, channels, revenue streams, key resources, key activities, partners and the cost structure. These nine building blocks, shown in Picture 1, were derived from in-depth literature analysis from previous conceptualizations of existing business models (Fritscher & Pigneur, 2010, p.29).

PICTURE 1: THE CANVAS BUSINESS MODEL (OSTERWALDER & PIGNEUR, 2010) Each block can contain elements exemplifying the blueprint of its business logic. The value

proposition is shown in the middle. Because this research will focus on the consumer behavior aspects of the business model, the influence of the value proposition on the consumer perspective of the canvas business model will be central.

‘Client segment’ is the building block that defines the different target groups of people or organizations. This helps to identify different needs, ambitions and desires. To better anticipate these particular needs, organizations can classify client segments in common or shared needs, behavior and other attributes. Examples of client segments are: the niche market, the mass market, the segmented market, the diversified market and the multi-sided platforms market. By analyzing consumer behavior, i.e. the different needs of every client segment, it will be possible to determine how V2G applications can be valuable for the consumer.

The value proposition is the reason why consumers would use V2G applications. The value proposition is the main source to solve a problem or satisfy consumer’s needs. It entails a selected bundle of products and/or services to fulfill the requirements of a specific consumer segment. Values can be quantitative, e.g.: the speed or the price of a service, or qualitative, e.g.: experience, the design or ease of use. The following elements are cornerstones and could independently contribute to the value creation: newness, performance, customization, “getting the job done”, design, brand/status, price, cost reduction, risk reduction, accessibility, convenience and usability. Which elements are important for V2G applications will be described in section 4.2. This means that the value propositions for V2G applications are presented. The value propositions are delivered through the distribution channels and supported by customer relationships.

As stated, this research seeks to provide an understanding of the role of consumers in the implementation of V2G applications in society. In business models the consumer perspective will play an essential role in building the value propositions. Clearly, consumers will not use a new innovation if it has no value for them. Since the consumer perspectives play a key role, it has to be clear in which framework these consumer perspectives are implemented (the frameworks are presented in the next sections; V2H, V2B and V2C). The various frameworks provide different ways to integrate and use V2G.

V2G applications are not yet available for customers and in the literature there are still doubts about how to implement V2G in society. For that reason, in the following part an overview is given of literature on already-developed frameworks within business models for V2G applications.

4.1.2 PROPOSED FRAMEWORKS WITHIN BUSINESS MODELS FOR V2G

APPLICATIONS

In this section, different literature is presented about V2G frameworks, providing an overview of concepts for V2G frameworks. These frameworks provide the key resources and key activities for the usage of V2G, e.g. the distinct (dis)charge infrastructure. In literature, the different conceptions about V2G applications are widely discussed. This research seeks to determine which framework is most valuable for consumers. Comparisons between V2G frameworks and preferred consumer beliefs should lead to a better-developed V2G business model based on the most promising framework. Kempton and Tomić (2005b) describe three different business models to address economic advantages over current energy generators. A first proposed business model to create value for the consumer is based on the fleet management strategy. Fleet management strategy draws V2G power only from EDVs from known and fixed schedules. For example, if a fleet of EDVs is used 5 hours a day and not utilized from 1 pm till 8 am, then we know that, in this specific timeframe, the vehicles could be used for V2G activities. The framework centers on the fleet operator selling the V2G power. The same party also sells ancillary services directly to the grid operator and manages the fleet’s time availability for power transportation.

The second business model is based on dispersed EDVs (rather than a fleet of EDVs). The EDVs need to form part of an existing business relationship, such as a contractual agreement between employees and an employer. The aggregator, who could organize the trade of power, would be the retail power delivery company (e.g. Nuon or Essent etc.) Normally this company sells retail power, it could expand its business to include buying V2G power. In this way they are able to capture the power of thousands of individual EDVs owners and sell this power to the regional power market. The

aggregator, i.e. the retail company, has no direct control over when individuals are plugged in. But they could use financial incentives to persuade EDV owners to stay plugged in as long as possible, thus creating more control over individual operating schedules. Eventually the retail power delivery

company would integrate a payment system of the V2G application into the existing electricity billing. For the consumer this would lead to lower bills from the traditional power delivery company. The term aggregator is used in much literature and in this research it would be a player on the electricity market and the consumer market. The aggregator is the interface between consumers and the electricity market, controlling and providing V2G services.

The third business model is a development from the second model, in which an independent party, serving as aggregator for the individual EDVs, replaces the retail power delivery company. Several parties are proposed to operate as aggregator, including (1) a cell phone network operator, using its business expertise to provide communications services and tracking and billing of power services; (2) a battery distributor/manufacturer, that could offer battery services and free replacement of batteries in exchange for some profit from the V2G power; and (3) an EDV manufacturer or an automotive service organization - they could use the latest vehicle telematics to deliver information services. This business model tries to find the best possible fit between the aggregator and the consumer.

These business models are based on smart integration of vehicles and the electric power system, rather than keeping vehicles and the power system separate. These business models support a transition to V2G. For the short term, EDVs should be tapped to provide high-value, regulation / spinning services and time-critical services. The long-term role of V2G - serving as storage and backup for renewable energy – implies a reconceptualization of the entire energy system.

San Román, Momber, Abbad, and Sánchez Miralles (2011) describes a slightly different way in which V2G applications can be valuable according to three business models. Firstly, a business model based on EDVs at home as a storage resource to minimize electricity payments towards traditional electricity supplier. There is no need for an aggregator because the energy will not be directed to the grid: it will remain in a closed system between the EDV and the house. The EDV can store energy with off-peak prices for electricity and use the power from the supply contract. Then the EDV should return the stored power back to home at high-peak prices minimizing the electricity payments to the electricity supplier. The profitability of this approach depends on EDV parking times at home, EDV battery efficiency and the price spreads within current supplier contract. This

framework is comparable to the V2H framework that will be explained below, except that retained power is not sold to the electric grid.

The second business model is based on an EDV connected at home providing V2G power managed by an aggregator. This is a variant of the previous business model, integrating an EDV aggregator that would manage EDV with V2G capability to buy and sell energy a day ahead to potential interesting markets, providing regulation services. In this approach, an independent operator that controls the power flows is essential. Compared to the second and third business models of Kempton and Tomić (2005b), there several similarities. Most important is the use of a retailer or aggregator to bring the power back to the market, leading to economic advantages.

The third business model by San Román et al. (2011) is based on EDVs connected at public parking sites, offices or commercial buildings providing V2G power managed by an EDV aggregator. Here, too, an operator is necessary to control regulation services. EDVs should be pooled to connect the cars and use the V2G capabilities with a contract supplied by an EDV aggregator providing the services. This is comparable to the V2C framework, except that the aggregator proposed by San Román et al. (2011) is the common denominator, instead of the community.

Summarizing the three business models of San Román et al. (2011), he made a distinction between three kinds of V2G applications. The first is completely private with an internal loop. The second is private but with access to the public. The third is public, and the power can be distributed to the public. According to the authors the first business model, the home application, is regarded as the most promising model for the near future, as it is the easiest to implement.

Evidently, the use of EDV aggregators to buy and sell power from EDVs is seen as a popular link in the V2G business models. This is confirmed in the research of Guille and Gross (2009), who believe that aggregators are the key agents for V2G implementation. Therefore the survey asks which aggregator consumers consider the most attractive. In addition, the authors solve computer control and communication infrastructure problems to integrate V2G applications. In Picture 2 the business model of Guille and Gross (2009) is presented. On the left, the EDV is used as resource, in other words when there are low-peak prices, it is profitable to sell the power. On the right, the EDVs needs to load and is not used as mobile electricity plant.

PICTURE 2: BV: BATTERY ELECTRIC VEHICLES, ISO: INDEPENDENT SYSTEM OPERATOR, ESP:

ENERGY SERVICE PROVIDERS, ∑= AGGREGATOR (GUILLE & GROSS, 2009).

Based on the proposed designs in business model literature for V2G applications it is technically possible to create a framework where consumers, traditional power suppliers, independent system operators and an aggregator work together to create economic value.

For consumers it may be hard to adopt and accept V2G applications (Sovacool & Hirsh, 2009). In the next section, three infrastructural frameworks for V2G business models are presented. These frameworks are based on the literature discussed above and can be seen as the three most promising possibilities for current V2G implementation.

4.1.2.1 OVERVIEW VEHICLE-TO-GRID FRAMEWORKS There are different types of V2G applications to create economic value for consumers. The

applications may roughly be divided into three main categories: Home (V2H), Vehicle-to-Building (V2B) and Vehicle-to-Community (V2C). These categories can be seen as infrastructural frameworks for using vehicles to provide energy back to the grid. The frameworks will be presented separately and it will be investigated which framework will be the most interesting for consumers.

4.1.2.1.1 VEHICLE TO HOME (V2H)

This V2G application is based on EDVs for the household and a connection to the household. The EDV is parked in a private spot nearby the house with a (dis)charge spot. Energy flows in a circuit

between the EDVs, the (dis)charge point, the household and the electric grid. Also solar panels could be installed to deliver energy to the household or to the EDV. As shown in Picture 3, the EDV not only receives energy from the grid to charge the EDV, but vice versa it is capable of providing energy back to the household. In addition, the EDV can be used as an energy storage place for the household to provide ancillary services and manage high peak and low peak energy hours.

PICTURE 3: VEHICLE TO HOME (V2H)

The home energy management system will organize the required flows of energy. The aggregator will provide services to manage the most efficient energy flows. Consumers have personal billing

conditions with the aggregator, including costs for energy and revenues for selling energy. The infrastructure costs for this particular V2G application are the lowest compared to V2B and V2C, and it is easy to install (Guille & Gross, 2009; Kempton et al., 2013; Kempton & Tomić, 2005b; San Román et al., 2011)

4.1.2.1.2 VEHICLE TO BUILDING (V2B)

Managing a group of cars to operate in the V2G application characterizes the V2B framework. Cars are connected to a building, e.g. a workplace, and the company provides V2G services. In this way, a fleet of cars operates as a mobile electricity plant. This framework has more energy supply then V2H. The EDVs have a private parking spot to (dis)charge or operate as energy storage point for the building. In addition, solar panels could be installed on the building to generate energy for the EDVs and the building. In this framework multiple EDVs are active and the energy supply is on a larger scale than with V2H. The aggregator is linked contractually to the employer and the employees (Guille & Gross, 2009; Kempton et al., 2013; Kempton & Tomić, 2005b; San Román et al., 2011).

PICTURE 4: VEHICLE TO BUILDING (V2B) 4.1.2.1.3 VEHICLE TO COMMUNITY (V2C)

The V2C framework makes use of several buildings and households with different functionalities in the same neighborhood. Public charging is a feature here as well. There are multiple (also shareable) EDVs. Energy coming from solar panels and the electric grid can be used for EDVs. The group of EDVs has the same aggregator. Energy is generated and stored locally. The V2C framework has high infrastructural costs, which makes implementation harder. On the other hand, the energy stored on multiple local spots can be aggregated and used where it is most needed. In this way it becomes easier to manage low peak and high peak hours of energy, due to the availability of a larger supply.

Another possibility is the use of car-sharing services. Examples of car-sharing services are Car2Go and Zipcar. Consumers can use cars exclusively for one-way point-to-point rentals. In the case of Car2go with V2G, Car2go cars could provide energy back to the grid at the load points of Car2go. In this sense Car2go could deliver cheaper services per minute compared to the current situation without V2G. Ownership of the V2G cars remains with Car2go, but consumers could use them for

transportation (Guille & Gross, 2009; Kempton et al., 2013; Kempton & Tomić, 2005b; San Román et al., 2011).

The proposed classification of the three frameworks V2H, V2B and V2C are the preferred frameworks for a smart electric grid. However, for full exploitation of the smart grid, these frameworks should be integrated with each other (Liu et al., 2013). The corresponding features for V2H, V2B and V2C are summarized in Table 1.

TABLE 1: FEATURES OF THE V2G FRAMEWORKS

When we consider the literature that has been discussed, we find that there are different interpretations on the adoption of V2G. This research seeks to identify which framework consumers would prefer. The following sub-research question is made to utilize the best framework for V2G applications:

“Which framework within business models for V2G applications is most attractive to consumers?”

4.2 CONSUMER BEHAVIOR

In a study of a Consumer-to-Grid project it is shown that the human factor is important in new business models (Palensky & Dietrich, 2011). Control engineers tend to categorize consumers as a disturbance or a stochastic variable. But in the case of implementing V2G in the energy system, consumers can provide significant local intelligence. It is key that they are included the right way in the transition to a new business model. New technology cannot succeed if target consumers do not understand it or do not like it.

This chapter will introduce the Integrated Behavioral Model (IBM) for understanding the most

V2H V2B V2C

V2G availability Personal Personal and businesses Personal, businesses and the neighborhood (Dis)charge spots Home At offices (e.g. Work) Public places, households and legal offices

The aggregator serves One household Households and businesses Government institutions, households, legal offices and neighborhoods Number of EDVs One single EDV Multiple EDVs Large number of EDVs

Flexibility Lowest Neutral Highest

Infrastructure costs Lowest Neutral Highest

Installment Easy Normal Hard and complex

Transmission losses Insignificant Small Significant

Functions Act as energy sources to provide grid ancillary services

Sell excess energy back to the grid at high peaked time Charge energy at less expensive off-peak time Act as backup generator and a controllable load

Reactive energy/power support Coordinate with renewable energies

important determinants for consumer behavior and describing consumer beliefs (from the Canvas model). The IBM will form the theoretical basis to examine consumer motivation to use V2G applications. Consumer’s salient issues are recognized for the adoption of V2G. Then, consumer innovativeness is discussed. Afterwards, existing consumer behavior towards EDVs in general is presented as an example for V2G applications. Finally, the Victorian study is presented, yielding important discoveries regarding the implementation of V2G.

4.2.1 THE INTEGRATED BEHAVIORAL MODEL (IBM)

This research wants to explain the beliefs of consumer’s for V2G applications. If you know what the consumer thinks, you can respond with business solutions. Therefore, behavioral aspects are examined in this survey. Knowledge about specific behavior is required to examine influencing determinants for the use of V2G. Three models are widely used in marketing and psychological studies to measure the adoption of new services or products: the Technology Acceptance Model (TAM), the Theory of Reasoned Action (TRA) and the Theory of Planned Behavior (TPB). The theories use various factors to explain certain adoption of new products or services. These theories have been developed and shaped in recent years by Fishbein (2007) and colleagues and they proposed the, which has culminated in the Integrated Behavioral Model (IBM).

The TAM provides attitudinal explanations of the intention to use a specific technology or service (Davis, Bagozzi, & Warshaw, 1989; Davis, 1989). The TAM includes five concepts: perceived usefulness, attitudes towards use, perceived user friendliness, intention to use and actual use. These constructs are general and the TAM excludes the subjective norm, such as the user’s perception of how others think he/she should behave and user’s motivation to meet with the expectations of others. The TRA and the TPB discuss individual motivational factors as determinant for specific behavior (Fishbein, 2007). The TRA is concerned with cognitive beliefs and values to determine the motivation for specific behavior, and adds the subjective norm to the TAM. The TRA is used to explain behavior, specifically deliberate behavior.

The TPB adds perceived behavioral control to the TRA. The TPB concentrates on the constraining or facilitating conditions that can affect intention and behavior, such as environmental constraints (Ajzen, 1991). Such conditions affect the control one has over one’s behavior.

As mentioned above, these models have been developed and extended in relation to each other. These models combined explain the intention to perform a specific behavior. The IBM is formed out of these theories and other major influential theories (Montano & Kasprzyk, 2008). To complete the IBM, Bandura (2006) added the ‘personal agency’ determinant. The IBM (Picture 6) includes the most promising components from behavioral studies and can be used as a framework to define the intention to show a certain behavior. Therefore the IBM is seen as the most complete model to define the intention to show specific behavior.

PICTURE 6: THE INTEGRATED BEHAVIORAL MODEL (IBM), MONTANO & KASPRZYK (2008) Lack of motivation will lead to rejection of a specific behavior. Besides attitude, perceived norm and personal agency1 _{there are four additional factors, as seen in Picture 6, directly affecting behavior.}

These components determine whether intentions can result in behavioral performance, i.e.: knowledge and skills to perform the behavior, behavior should be salient to the behavior, no or only a few

environmental constraints and habitual intentions could make the behavior less important in determining performance (Jaccard, Dodge, & Dittus, 2002). When these components are positively conceived, a particular behavior is likely to occur. The components are important by themselves. According to the IBM, the three construct categories for determining behavioral intention are: attitude toward the behavior, perceived norm and personal agency (Fishbein, 2000; Montano & Kasprzyk, 2008). In these construct categories different aspects of the above-mentioned TAM, TRA and TPB are absorbed. First, Attitude toward the behavior, is defined as overall favorableness or un-favorableness of a person toward performing a specific behavior. Attitude is seen by many theorists as a constitute of cognitive and affective dimensions (Triandis, 1980; French, 2005). Experiential attitude

1

Italic words are determinants or variables used in this research to investigate the influence on the intention use V2G.

(affective) is the emotional response to the idea of showing a specific behavior. It is irrational and based on behavioral decisions from the heart instead of the head, e.g. fear, hate or sympathy. When a strong positive emotional response is given, the behavior is more likely to occur. The same applies to a strong negative emotional response: the likelihood of the specific behavior will be low. Instrumental attitude (cognitive) is the beliefs about outcomes of a behavior. This is rationally-based and behavioral decisions are made with the head instead of the heart (for example: German cars are reliable). A person with strong positive beliefs about the outcome of the behavior will have a positive attitude towards the behavior, and the opposite holds true with negative behavior.

The second aspect, perceived norm, describes the feelings of social pressure towards showing a specific behavior, focused on the normative influences. The injunctive norm (or the subjective norm from TRA/TPB), are the beliefs people have about what others think they should do and the

motivation to act upon those beliefs. Completing the normative influences, the descriptive norm covers the perceptions of other people’s behavior in one’s personal or social network. The actions of others may influence one’s intention towards a behavior, capturing the strong social identity in certain cultures (Bagozzi & Lee, 2002; Triandis, 1980).

Finally, personal agency reflects the individual’s capability to originate and direct events for provided reasons (Bandura, 2006). Personal agency contains two constructs: perceived control and self-efficacy. Perceived control is the person’s perceived amount of control over behavioral

performance. This perception is controlled by various environmental factors. These environmental factors make it easier or harder to perform the behavior. In the opposite, self-efficacy focuses on the degree of confidence in his/her effectiveness to perform a particular task in face of different challenges and obstacles.

The relative influences of the three different constructs, attitude toward the behavior, perceived norm and personal agency, can vary for different populations and behaviors (Fishbein, 2000). The dependent variable, intention to perform the behavior, can be influenced with more or less effect by the constructs. For example, the intention to perform a particular behavior can mostly be dependent on the perceived norms, while other behavior is more dependent on attitudes. This means it is very important to determine the extent to which the intention to perform a behavior is affected by attitude toward the behavior (experiential and instrumental), perceived norm (injunctive and

descriptive) and personal agency (perceived control and self-efficacy). These salient outcomes should be recognized. This V2G research identifies these salient issues in existing studies, e.g. a study where a community integrated EDVs and numerous salient issues are classified. These issues are considered as independent variables in the intention to perform V2G, i.e. the dependent variable.

Consequently, using the IBM it is possible to identify particular belief targets with associated influencing interventions (i.e. the three construct categories) and their specific underlying beliefs. In other words, can the intervention of normative influences motivate a person to perform a specific behavior once? If this is a positive experience, it could reinforce positive feelings and beliefs toward

the behavior.

Thus: “The IBM provides a theoretical basis from which to understand behavior and identify specific beliefs to target” (Montano & Kasprzyk, 2008, p.81). The IBM is used in a variety of settings and can be applied in different cultures (Fishbein, 2000). Also, the IBM has fundamentals based on the TAM and is therefore useful for technology acceptance. Accordingly, the IBM is suitable to

investigate behavioral variables for V2G applications. The variables (salient issues) that are important to understand V2G behavior are adopted from other studies and are classified in the three construct categories. These variables are integrated in a survey to understand the influences of the intention to perform a behavior, i.e. to use a V2G application.

In the next section, consumer innovativeness is discussed to obtain an understanding of the degree of a person’s innovativeness. This will be helpful in defining a target group which is more interested in the adoption of V2G.

4.2.2 CONSUMER INNOVATIVENESS

The consumer behavioral part of this research tries to understand the needs and beliefs of consumers in relation to V2G. In addition, it is valuable for research to understand what kind of people have these particular beliefs and which persons are able to adopt V2G. Both dispositional innovativeness and demographic variables (age, income, education etc.) play a role in the acceptance of new products (Rogers, 1995). Dispositional innovativeness is defined by Steenkamp, Hofstede and Wedel (1999, p. 56) as “the predisposition to buy new products and brands at an early stage, rather than to remain with previous choices and consumption patterns, across a variety of goods and services”. This means that it is useful to identify consumers who want to buy V2G at an early stage. Classifying consumers into categories could be useful for defining a target group for V2G. With a target group the usage of V2G can easier be increased. Gielens and Steenkamp (2007) conducted scale items and are used in the survey of this research. Five adopter categories are widely used in literature: innovators, early

adaptors, early majority, late majority and laggards (Agarwal, Ahuja, Carter, & Gans, 1998; Haines & Jones, 1994). By using the scale items of Gielens and Steenkamp (2007) it is possible to categorize the participants of the survey. In an earlier study (State government of Victoria, 2013) no difference was observed in usage behavior between early adopters and mainstream users. Therefore the following sub-research question is proposed:

“Which adopter category is most interested in V2G applications?”

4.2.3 EDV BELIEFS

The IBM and consumer innovativeness are discussed in the light of consumer behavior. This is then linked to EDVs and V2G in order to understand which behavioral insights have already been developed, especially with regard to EDVs.

According to Palensky and Dietrich (2011), an investigation of behavior of current EDV users can play an important role in developing a new business model. This behavior helps to identify shortcomings and reasons why V2G applications are not yet in the running. Because the integration of EDVs is “the” necessary precursor to the development of V2G technology (Sovacool & Hirsh, 2009), it is valuable to explore behavioral patterns already observed in EDV technology and to use these salient issues as an example to develop leading variables for consumer behavior towards V2G applications.

Even when technical problems are solved in implementing V2G applications (which is possible according to Guille and Gross (2009), social and cultural barriers will arise when using V2G applications (Sovacool & Hirsh, 2009). Sovacool and Hirsh (2009) also used arguments for EDV-related literature to conceptualize consumer behavior towards V2G. The first initial investment is seen as an economic disincentive to integrate V2G technologies in households, public places and

businesses. Moreover, consumers expect vehicle efficiency improvements to pay for themselves three times faster than it is actually the case. In addition, consumers use discount rates, i.e. the recoup rate for their initial investment, that are too high as compared to reality. So future savings and discount rates can serve as a controlling impediment when investing in new technologies for V2G technologies (DeCanio, 1998; Levine, Koomey, McMahon, Sanstad, & Hirst, 1995).

Furthermore, it is found that car owners believed that EDVs had a disutility between $10,000 and $16,250, to compensate for comfort, freedom, flexibility and mobility (Sovacool & Hirsh, 2009). The consumers felt they needed at least $10,000 dollar compensation for the inconvenience of driving an EDV compared to fossil dependent engines. In addition car owners hold on to their cars for an average of approximately 5 years (IHS Automotive & Polk, 2014). In the survey this discount rate, or disutility, is tested as between V2G cars and fossil fuel cars. V2G-related costs and revenues prove to be an important determinant for consumer behavior. The costs and revenues are explained in the next section.

By contrast, Sherman (1980) found that the consumer’s choice was not only dependent on costs or revenues, but that product styling and deeper attitudes (mobility or comfort) were equally important. Also the experience of an “alternative traffic culture”, based on slower speeds, careful and saver driving (resulting in a lower accident rate) got more attention. The University of California by the Institute of Transportation also found a social stigma against LEVs among the respondents. People called these cars cheap, small and light. Also, improving the environment could stimulate consumers to buy EDVs to enhance their social standing. Friedman (2003) adds that the transition to V2G would drastically mitigate greenhouse-gas emissions, reducing global warming. We may conclude that social stigma, mobility, comfort and environmental recognition as variables in the integration of V2G

4.2.3.1 V2G COSTS AND REVENUES

There are several aspects to consider when looking at costs and revenues. Studies are not unanimous in defining costs and revenues. Especially external factors play an important role, such as energy prices. Therefore, in this research the costs and revenues based on different studies will be averaged, to result in net annual profits. This will be helpful in investigating the attitudes of consumers towards these costs and revenues.

Firstly, the costs of V2G include the purchase of a V2G-ready EDV, the home installation and purchased energy. The average price of a US car in 2013 was $31,252 (Daily News, 2013). In The Netherlands it was 25.000 EUR, about $34,0002 (Center for Automotive Research, 2013). The cheapest four-seater EDV (not V2G-ready) in 2013 was the Mia Electric for $27,880 EUR. The Nissan Leaf EDV, a more common car, has a purchase price of $33,720. A similar-size conventional fuel-driven Ford Fiesta has a purchase price of approximately $13,200 (Figliozzi, Boudart, & Feng, 2011). Comparing these prices, it may be concluded that EDVs are roughly twice the price of

conventional cars. For EDV manufacturers to build V2G-ready EDVs, an estimated additional $2,000 (1,460 EUR) would need to be charged on top of the current purchase price (Kempton et al., 2008). Because they need to add components for V2G-ready EDVs compared to non V2G-ready cars. No prices are available for V2G-ready EDVs. It will therefore be assumed that a V2G-ready Nissan Leaf would cost around $35,000. In The Netherlands, car prices are on average 10% higher than in the US (Center for Automotive Research, 2013). But in The Netherlands, there is no BPM for zero CO2

emission cars. Therefore, in The Netherlands, we will assume a price for the V2G-ready Nissan Leaf of 23,000 EUR. This is used in the survey as price for the respondents to present what a V2G car should cost. In this way they can compare their current driving conditions, including the purchase price, to a situation with the usage of V2G.

The home installation costs are based on the average of three studies. The costs are all calculated for 15kW EDVs. De Boer-Meulman et al (2010) estimated costs of $3,543 for the home installation (3.5kW), but an upgrade is needed of $950 to be 15kW ready, taking the costs to $4,493. Kempton et al. (2008) estimated $2,000 for the home installation. The government of the Australian state Victoria (2013) estimated $1,7503 _{AUD for home installations. So, on average the estimated}

costs of the V2G-ready (dis)charge point is $2,714, or 1,981 EUR. In Amsterdam the municipality gives a 500 EUR subsidy, so the costs would be 1,481 EUR for the home installation point

(Municipality of Amsterdam, 2013).

An amount of 1,481 EUR in the early phase for households in the Netherlands to install V2G may be considered a reasonable assumption. Therefore 1,481 EUR will be used to test the influence of this figure on the intention to use V2G. However, a study of drivers conducted by the University of

2

The taken exchange rate is 1 EUR = $1.36, vice versa $1.00 is 0.73 EUR (In text all $ are USD). 3

California by the Institute of Transportation concluded that consumers are not able to analyze vehicle costs in a systematic way (Kurani, Heffner, & Turrentine, 2008).

Costs through the year (including purchased energy, wear and capital costs to expand EDV to V2G) range between $3,202 and $4,022 (whereas capital costs are annualized and multiplied by the capital recovery factor plus a discount rate and the years the device will last is taken into account). However, these costs will be processed in the net annual profits for using V2G. The same applies to the revenues, although revenues are between $7,794 and $8,367 (Kempton & Tomić, 2005a) On the other hand, studies projected illustrative annual net profit for V2G applications managing ancillary services between $3,772 and $4,595 per vehicle with a participation of 75% a day (18hrs/day) of charging and discharging. Peak power contributes $290 to the net profit, spinning reserves $1,751 and regulation services between $1,731 and $ 2,554, depending on the practical power drawn from the car (10kW or 15kW correspondingly) (Kempton & Tomić, 2005a).

Another study from Morse and Glitman (2014) calculated the net profits for individual vehicles aggregated through a third party of $480 per year with low power connections (3.6 kW). The vehicle had a 50% participation per day (12hrs/day) of charging and discharging. With high power drawn from the car (60kW) the net annual profit could rise to $8,064 ($134 per kW a year with 50% participation). Combining the studies by Kempton and Tomić (2005a) and Morse and Glitman (2014), the conclusion is that it is possible to earn an average of $271.3 per kW a year practically drawn from the EDV (net profit for the Morse and Glitman study is adjusted to participation of 75% due to charge and discharging at workplaces). Participation of 75% is reasonable, because multiple studies assume one hour driving to and from work, an add-up of one hour driving to different locations and 4hrs of charging (Lampropoulos, Vanalme, & Kling, 2010; State government of Victoria, 2013). The other 18hrs (75%) can be used for beneficial V2G usage. Hence, the possible earnings depend on the power drawn from the EDV. In this research it is assumed, based on the cited studies, that EDVs are able to deliver between 10kWs and 20kWs of power. The resulting assumption is that net annual profits will be on average between $2,713 and $4,069.5. For the survey the mean of $3,391.25 (2,475.6 EUR) is taken with a participation of 75% and 15kW capacity for work and home (dis)charging. When people are only able to charge at home, the participation will be half at 37.5% (9hrs discharging, 4hrs charging) and the net annual profits will be $1,696 (1,238 EUR). An overview of the net profits for different load points is given in Table 2 for a working person. The various possibilities are that a working person has the possibility to (dis)charge only at home, only at work or both at home and at work. The person drives an average of 2 hours a day and the load points define the (dis)charge participation.

TABLE 2: OVERVIEW NET PROFITS V2G

The calculations are specifically V2G net profits. There are no comparisons with the use of fossil-driven cars. When fuel costs (petrol) are added, additional savings can be realized. Based on costs of 0,126 EUR / kilometer driven, people save an additional 1,645 EUR. On average, Dutch people drive 13,059 kilometers (Van Weerdt, 2014). So, 4,121 EUR a year can be saved compared to fossil-driven cars when people are able to (dis)charge at home and work. Only (dis)charging at home would lead to total savings of 2,882 EUR a year4. Net annual profits for V2G usage are used in the survey as an independent variable.

Accordingly, consumers are sensitive to the economic value of EDVs whereby initial costs, operational net profits, future savings and discount rates are crucial variables. As stated, it has also been noted that social stigma, mobility, freedom, comfort, and environmental recognition are important variables. All these variables are used in the survey as independent variables to test the influence on the intention to use V2G.

In sum, behavioral aspects play an important role in the acceptance of a new technology. These behavioral aspects have not yet been tested for V2G applications. Before introducing a new proposition about consumer behavior and the adoption of V2G, the Victorian study will be discussed in the next section. This study is an example of a community where EDVs are used and tested on behavioral aspects (for example, how consumers think about the operating costs for EDVs as an important factor). These aspects, together with the aforementioned social and cultural barriers, deeper attitudes and known characteristics of EDV drivers, will generate a new proposition. That proposition will be examined in the survey.

Before discussing the Victorian research, a study from Lampropoulos et al. (2010) will be introduced. This study considered also relevant important factors. Their research was about modeling EDV driver’s behavior in order to research the grid impact of EDVs charging in the residential areas of the Netherlands. They examined that most of the demand for power strikes in typical distribution grids that supply residential loads was between 17:00 and 19:00. When the EDV user starts the charging process around that time, this will result in a high aggregate load during those hours. This could lead to increased energy losses and an overload of the equipment. The dominant users were the

4

Net profits are based on V2G usage. Savings are based on the comparison between fossil-driven cars and EDVs.

Load%points

Home Work( Home(+(Work

Charging((hrs) 4 4 4

Discharging((hr)s 9 9 18

Driving((hrs) 2 2 2

Participation(/(day 37.5% 37.5% 75%

“working people”. Due to characteristics of this group, i.e.: driven distances, schedules or time management, it would be valuable to shift a part of the demand power for charging power towards the parking lot of the work location. This could rebalance the overload of charging demand during peak hours at residential places. Thus, the communication between the EDVs and the power grid is important to provide efficient energy services. When designing a new business model for V2G applications, these user characteristics need to be valued, i.e. driving distances (range limits) and time management. This can already be linked to the V2B application or V2C application, where the work-sphere is an important determinant to facilitate the infrastructure of the application. The Victorian study in Australia will enforce these findings.

4.2.3.2 THE VICTORIAN STUDY

In this study there will be a description of a trial with EDVs in a community as a whole (State government of Victoria, 2013). Different characteristics of the drivers, the community and the technology are analyzed. This will show that the use of this report could provide valuable insights for the development of V2G applications. On behalf of the consumer behavior part of this rapport, they investigated several characteristics for the usage of EDVs in general. The usage of EDVs as transport vehicles differs from the usage of EDVs as mobile electricity plants. For that reason a survey will be conducted to analyze behavior towards V2G applications. As stated, the integration of EDVs is the precursor for V2G applications.

The State government of Victoria (2013) published a mid-term report trying to recognize the pathways and timelines for the EDV market development. This was based on a trial, with a Victorian community using EDVs. This community, 70 corporate participants and 120 households, form the basis of the Victorian electric vehicle market. This trial sought input from vehicle suppliers, charging infrastructure providers, fleet operators and any other interested party who might offer support for the community of EDVs. The participants supplied quantitative and qualitative data on regular basis via vehicle communication, interviews and questionnaires. The participants using an EDV had the following characteristics: - high environmental awareness, - positive to regulations from government to use EDVs, - confident in using solar PV systems, - two adults with no children, - interested in new technology, - between 18 and 34 years old, - possess no car. These characteristics are consistent with other research for EDVs users. The relevant results for this research are presented in the next section.

4.2.3.3 BEHAVIORAL VARIABLES

The mid-term report is 152 pages and contains many results. Therefore, only the useful variables for consumer behavior are presented and ordered here, based on the IBM. Also the variables already obtained from literature in section 4.2.2 (consumer innovativeness) and section 4.2.3 (EDV beliefs) part will be included. In this way the survey can be conducted based on the key construct categories from the IBM model. The assumption made for this research is that the Victorian trial is a good

example concerning the behavior of consumers, because the implementation of V2G applications is an extension of the usage of EDVs at home, by buildings or as community.

The Victorian trial tested with households (including fleets of EDVs) and tested the use of EDVs in a business setting. With regard to home charging, the majority of the household felt that home charging by itself met their needs. Consumers had the option of making use of smart charging management by reducing costs and charge at low-peak hours. Through mobile applications the consumers were able to control vehicle charging at the times this was most interesting (lowest costs). The attribute infrastructure for charging the EDVs was tested on the following variables: ease of use, confidence in understanding what is happening, convenience, perceived safety and reliability. All variables were rated a high positive for the usage of EDVs at home. However, the infrastructural costs (initial costs) for home charging EDVs remain an obstacle for the consumers. The average cost for the V2G charging infrastructure circuit amounts to $1,750 AUD. Accordingly, this is important for V2H as well and these variables should be tested in the survey. So the attributes to use the infrastructure for the EDV were rated a high positive, but the costs to use them still play an important role for the usage. There is a difference between households and corporate fleet EDVs in terms of the charging hours. When participants were able to operate as a fleet and charge at work, they mostly used this opportunity and EDVs were charged between 10am and 4pm with high demand. By contrast,

households had high demand for charging between 6pm and 1am (see Picture 7). With regard to time, the consumers need to take care of time management to charge efficiently.

PICTURE 7: EDV USAGE PATTERNS, SOC: STATE OF CHARGE (HIGH=FULL BATTERY LEVEL) (STATE GOVERNMENT OF VICTORIA, 2013)

A problem for corporate EDVs is that the organization benefits little from providing EDVs as a fleet for its employees. However, participants showed increased acceptance of the EDV and workplace charging was a key enabler for increased utilization of the trial vehicles. It has advantages for the driver in operational costs and removes any concerns about range limits.

Public charging is widely seen as the key issue for EDV uptake in terms of addressing range limitations. In this trial, the opinions were clear about the public charging infrastructure. The participants found it highly important to have a public infrastructure for recharge availability. Moreover, it is seen as key barrier for the adaption of EDV adoption. In addition, accessibility (ensuring charging spots, spots are accessible when required) and availability (provision of public charging) were reported as having the highest priority when it comes to public charging for EDVs. Public-recharge infrastructure, accessibility and availability will be added to the variables to test for V2G instead of only for EDVs.

Overall, summarizing the Victorian trial, there are interesting variables to test. These variables will play an important role in the development of V2G applications due to the importance of

implementing EDVs. The following variables are obtained from the Victorian trial: range limit, time management, operational costs, public-recharge infrastructure, accessibility and availability. TABLE 3: VARIABLES FROM THE VICTORIAN STUDY AND OTHER LITERATURE INTEGRATED IN THE IBM.

Attitude toward the behavior Perceived norm Personal agency

Comfort Perceived safety Ease of use

Reliability Environmental friendly Time management

Degree of innovativeness Social stigma Accessibility

Range limit Social standing Flexibility / freedom / mobility

Operational net profits Discount rates / future savings Confidence

Purchase price / initial costs Public recharge infrastructure / availability

Intention to use V2G

The variables shown above in Table 3 are from the Victorian study and studies discussed earlier. Now that it is clear which variables play an essential role in the use of EDVs, the variables can be included in a survey on the intention to use V2G applications. Previous research did not explain behavioral beliefs for V2G applications. Given their importance, this research will address these behavioral beliefs more deeply, as further explained in the Methodology. The following sub-research question is thus proposed:

“Which key construct of the IBM play an essential role in the intention to perform V2G applications?” The next section provides a description of the data and every step taken to conduct this research.

5 METHODOLOGY

This section describes how the research was conducted for both the qualitative and quantitative research methods. This study was divided in two parts: a business model part about V2G and a

consumer behavior part about using V2G. Different frameworks and current consumer behaviors were analyzed in the literature review (i.e. de qualitative part) and a survey is used to examine answers on the developed research questions (i.e. quantitative part). Statistical methods are used for the

interpretation of the survey. In the survey preferences and attitudes of consumers towards V2G were tested.

The literature review about different V2G frameworks and consumer behavior characteristics provided the basis for developing questions for the survey about the preferences and attitudes of consumers towards V2G. The answers are used to build and refine a business model for V2G from a consumer perspective.

The qualitative part was reinforced by a study with EDVs in the Victoria community in Australia (State government of Victoria, 2013). This Australian study was used, in combination with other literature, to provide important consumer behavior variables for the survey. The investigated variables in the Victorian study, i.e. the integration of EDVs in a community, were used as an example for V2G applications. Important consumer characteristics for EDV usage were compared and

integrated with consumer behavior for V2G.

In Figure 1, the conceptual model is presented. The survey tested consumer behavior (according to the IBM) and preferences for V2G frameworks within business models. This could be integrated to adjust these business models. In this way, a new business model from a consumer perspective is presented. With the integration of behavioral beliefs, the new business model provides incentives to increase the usage of V2G applications.

The main research question of this research is:

“How can V2G business models be designed to increase V2G usage?” Three sub-research questions underline the main research question:

1. Which adopter category is most interested in V2G applications?

2. Which key constructs of the IBM play an essential role in the intention to perform V2G applications?

3. Which framework within business models for V2G applications is most attractive to consumers?