In 2024, annual EV sales reached 22.7% of total vehicle sales in Europe. As we move closer to 2035, the de facto ban on the sale of new petrol and diesel vehicles will come into effect in some jurisdictions, creating even greater momentum around EV uptake. In local communities, the number of EVs will be largely commensurate with the number of dwellings. V2G could allow vehicles to plug and charge in their neighbourhoods, and also discharge, creating a relevant and available flexibility resource to balance the local network.

Smart charging allows consumers, who sit at the heart of the energy transition, to participate directly in providing flexibility. They can play an active role in relieving grid congestion, which lowers, in turn, the cost of electricity and increases reliability and security for users.

On balance, however, whether using V1G or V2G, smart charging offers a compelling economic justification. As identified in Eurelectric’s 2024 Grids for Speed study, making use of flexibility from available assets could contribute to a projected €4bn in savings every year for European grid operators. Combined with optimising the grid and anticipatory investments, flexibility can be considered part of a set of strategies to lower the overall grid investment cost from an anticipated €67bn to €55bn annually between 2025 and 2050.

The potential is huge. In terms of avoided curtailment of renewables, EVs could, in theory, contribute 4% of Europe’s annual power supply by 2030. Estimated at 114 TWh battery capacity, it is enough to power 30 million homes every year. And, by 2040, that potential becomes even more significant, as V2G could store more than 10% of Europe’s overall power needs and reinject when needed.

The economics of EV ownership will also improve where flexibility from unidirectional smart charging and V2G is optimised. Total cost of ownership (TCO) includes the cost of the vehicle, energy, tax, maintenance and insurance. Savings will vary by country and the electricity tariffs available. They will be informed by solar photovoltaic (PV) ownership, vehicle battery size, distance travelled and frequency of charge.

On a TCO basis, when the vehicle is optimally charged and benefits from V2G, EY estimates that the owner of a compact EV in the UK can save up to 19% (€1,270) annually compared with the cost of an internal combustion engine (ICE).2 In the large or sports utility vehicle (SUV) segment, the annual saving can be as much as 26% (€2,460). In Germany, Sweden and Spain, the TCO for a small vehicle could be reduced by as much as 14%. In France and the Netherlands, savings of 8% and 9% respectively may be realised.

Inevitably, using vehicle battery assets as a source of flexibility will bring challenges as well as opportunities. However, our conversations with industry leaders have allowed us to identify six prerequisites, which we explore in this study. They must be in place to unlock value from EVs as flexibility assets and support commercialisation.