In today’s issue…
- The one weird trick to extra income your car dealer won’t tell you about
- Marginal gains in the energy transition
- Eight talks to take you to the next level with your energy investing
When you see an advert telling you how you can make £500 extra income a year with no extra effort, you ignore it, right?
We Brits are good and sceptical about this kind of thing.
You’ve probably seen those crappy “the one weird trick for weight loss that doctors won’t tell you” ads, or something along those lines.
Well, my favourite satirical headline of The Daily Mash was always this one: “If there was one weird secret to weight loss, we would tell you, confirm doctors”.
So yeah, these things are often just click-bait, and it turns out to link you to a page trying to sell you Jamie Oliver’s new plant-based cookbook or some crappy health drink – same old rubbish.
But I’m going to tell you about one piece of technology that could make some UK residents hundreds of pounds of extra income per year.
It’s called V2G…
Vehicle to grid, also known as V2G technology, is both a driver and an unexpected consequence of the shift to electric vehicles (EVs).
It’s a feature that could help tip people over the edge to buy an EV, so could help to accelerate that transition.
But it’s also a new function for cars that has never existed before, and it could change the way we think about… everything really!
V2G, my one weird trick to potentially make £400 per year with no effort, is a technology which allows your EV to profit from demand shifts on the electricity grid.
I also have one simple way to become a better energy investor – more on that later.
That is to say, it allows an electric vehicle to charge up from the grid when prices are low (because of low demand, e.g. while everyone’s at work), and then sell that same power back to the grid when demand is higher, just as everyone’s cooking dinner, and prices are higher.
Investors the world over are struggling day and night to buy low and sell high (except these guys), but your car will soon be able to do it for you.
“EV arbitrage” is a term I coined for buying a global automaker with a low valuation, then spinning out its small EV business for a much larger valuation – the idea being that pure plays were being treated by the market as a hundred times better than EV businesses that were subsidiaries of established companies like Renault or Volkswagen.
This divergence has pulled back somewhat since I wrote that piece about almost a year ago.
So perhaps now that the original EV arbitrage trade has been squeezed out, we can now apply it to this new definition.
EV arbitrage can be when the electric car that you own, when not being driven, spends its day trading energy for you, buying low and selling high to generate a revenue.
In order to run this little trading desk under the bonnet, certain things are needed.
The first kind of charging for EVs, naturally, was “monodirectional” – i.e. power flowed from the grid to the car.
For our EV arbitrage to occur, vehicle-to-grid technology is required that allows power to flow bi-directionally – i.e. from grid to car, and from car back to grid.
This needs hardware so that both AC (alternating current – fluctuating levels, from grid to car) and DC (direct current – stable levels of power, used in the car) are possible in the same system. When grid power is used to charge the car, the current is converted from AC to DC.
For V2G, that translation needs to also happen in reverse.
So that needs advanced hardware that has only recently become commercially available.
Then, it also needs software.
The companies that offer V2G systems for electric fleets or vehicles offer the software that understands, independently of any human input from the car or fleet owner, when to load up on cheap electricity, and when to sell it back to balance the grid.
Buy when demand and prices are low, sell when they are high. The hardware is installed, the software runs the hardware for you.
The companies that are offering this kind of thing are now reaching billion-pound (private) valuations in the UK, according to a recent Financial Times article.
And one study shows consumers really can make around £400 per year from having their car plugged in 75% of the time, which is probably a low ball for many people, given that the average passenger car is parked 95% of the time.
So it’s really not a joke ad! V2G technology can potentially make you a few hundred quid, and it could also save the grid hundreds of millions of pounds every year.
I believe it’s going to be something you hear about in the future as investors as well as consumers.
Whether you’re shopping for cars or stocks, bear V2G in mind.
It’s just one of a hundred small details which most people don’t know about in the energy transition.
It’s marginal gains like vehicle-to-grid bi-directional charging which are making more and more people switch to an electric car. With enough of those, it’s no surprise that the EV transition is accelerating at quite a click.
For investors, it’s little things like V2G that we should be paying attention to.
When a huge new sector emerges like this, being ahead of the curve when it comes to the key technologies is a huge part of success.
That’s why we’re hosting another Beyond Oil summit, where I interview some of the biggest names in the energy transition and investing worlds.
Whether it’s someone who founded their own solar company back in the 1990s…
It’s got absolutely everything you could want.
It’s completely free, you get talks, reports, interviews and more.
I simply cannot recommend signing up enough.
All the best,
Co-editor, Exponential Investor
PS James himself is giving the keynote speech, don’t miss it, sign up now.