Risk-informed evaluation of delivery fleet electrification and vehicle-to-grid economics

Abstract

Commercial fleet electrification offers various cost optimization options, from smart charging to vehicle-to-grid (V2G) services. The optimal configuration is a function of a particular fleet's attributes and travel obligations. Comprehensive cost-benefit analyses are crucial, considering all costs and uncertainties in the changing electricity market. However, prior fleet electrification studies do not sufficiently capture market-based cause-and-effect relationships in estimating fleets’ V2G capabilities and revenues. This study addresses gaps in prior research by using a risk-informed Monte Carlo modeling framework to evaluate electrification costs and benefits under operational uncertainty and changing market conditions. The framework incorporates stochastic optimization for fleet frequency regulation decisions, revenues, and operating costs across seasons and rate designs. By considering market risks, demand charges, and travel needs, the model produces more realistic outcomes. Applying this framework to commercial delivery fleets in California, various electrification options are analyzed and compared to internal combustion engine vehicles (ICEVs), under different market scenarios. Key findings include: (1) V2G frequency regulation revenues are less lucrative than suggested by other studies, providing only marginal benefit (<4 %) over smart charging in some cases when fleet risk and travel obligations are considered (2) Vehicle-to-building (V2B) arbitrage and peak providing 5–6 % and up to 29.8 % operational savings, respectively, relative to smart charging baselines (3) Favorable electrification economics relative to ICEVs, achieving cost parity within 2–3 years and net present costs up to 30–40 % lower. Sensitivity analysis reveals that mileage, energy and vehicle prices, and maintenance costs most influence lifetime costs, while the impact of factors like demand charges and depot load size varies based on the fleet's service type. These findings have significant implications for fleet electrification strategies. Fleet managers should prioritize smart charging and carefully evaluate V2G investments and market structure, given their potentially limited returns. The substantial benefits of V2B services, especially peak shaving, suggest these should be key considerations in electrification planning. Policymakers and utilities can use these insights to develop more effective supportive frameworks and incentives for fleet electrification, focusing on approaches that offer consistent benefits across various scenarios. The robust economic advantage of electric fleets over ICEVs supports accelerated electrification efforts, even in the face of market uncertainties.