Demand response and vehicle-to-grid: Science and technology

How buildings, water tanks and parked cars act as stores

Demand flexibility adds no new store of energy. It changes when electricity is used, drawing on the heat or cold held in buildings and hot-water tanks and on the batteries of parked electric vehicles. So the 'mechanism' here is control and behaviour, not chemistry.

Mechanism

There are three main approaches. Demand response pays users to cut or delay load during peak hours, or sends price signals such as time-of-day tariffs. Pre-heating, pre-cooling and timed water heaters store heat or cold when power is cheap and coast through the peak; reductions are usually staggered over two to four hours. Electric vehicles can delay charging (smart charging, V1G) or send power back (vehicle-to-grid, V2G). IEA estimates only about 100 GW of demand response was actually used worldwide in 2024: about 75 GW in industry, 30 GW in buildings and under 5 GW in transport.¹⁴

Material scarcity and toxicity

Most flexibility reuses equipment people already own and adds only a smart meter, a thermostat, controls or software. V2G draws on vehicle batteries already mined for transport; the extra hardware is a bidirectional charger, under USD 1,500 for AC units and USD 5,000 or more for DC units. In India the main hardware constraint is smart meters: under the RDSS scheme 5.53 crore (55.3 million) of 19.79 crore sanctioned consumer smart meters were installed by 30 June 2026, about 28% (calculated), up from 19% in December 2025.⁶⁸¹⁴

Degradation and ageing

For thermostat and water-heater schemes, the ageing equivalent is customer fatigue: DOE's example programme assumes about 20 events a year. For V2G, the worry is extra wear on the car battery. IEA says recent tests and models suggest well-managed V2G can limit wear, but the evidence is mostly from models and cell tests. A Warwick modelling study found well-managed V2G could cut capacity fade by about 6% over three months. A 2025 study by RWTH Aachen and the aggregator The Mobility House, using cell-level ageing models rather than real cars, estimated 1.7 to 5.8 percentage points of extra capacity loss over ten years, worth about EUR 100 to 300. EV warranties typically guarantee 70% capacity after 8 to 10 years or 160,000 km.¹⁸⁹¹⁰

Variants compared^12481113

Sources

1. Pathways to Commercial Liftoff: Virtual Power Plants US Department of Energy, 2023
2. Liftoff: Virtual Power Plants (2024 update fact sheet) US Department of Energy, 2024
3. Electricity 2026: Flexibility International Energy Agency, 2026
4. Beyond capacity: why India's power system must get flexible to harness its solar potential (chapter: Building flexibility is central to accommodating increasing solar) Ember, 2026
5. Global EV Outlook 2026: Vehicle-to-grid technology International Energy Agency, 2026
6. On the possibility of extending the lifetime of lithium-ion batteries through optimal V2G facilitated by an integrated vehicle and smart-grid system (Uddin et al.), Energy 133 University of Warwick (WRAP repository), 2017
7. German study shows V2G has minor impact on battery degradation (trade press on a study co-authored by RWTH Aachen and the aggregator The Mobility House; not peer reviewed as far as found) New Mobility News, 2025
8. Octopus and BYD turbocharge EV revolution with all-inclusive car and charging bundle (company claims) Octopus Energy (press release), 2025
9. Are load flexible technologies affordable? A population-scale cost-benefit analysis (Grahovac et al., ACEEE Summer Study) Lawrence Berkeley National Laboratory, 2026
10. Rajya Sabha Unstarred Question No. 943: Delay in smart meter installation (answer by Ministry of Power, 27 July 2026) Ministry of Power, Government of India, 2026