2025 U.S. Vehicle-to-Grid (V2G) Market Outlook

Executive Summary
Vehicle-to-Grid (V2G) technology is becoming a critical solution for supporting the electrical grid and accelerating variable renewable energy penetration. This white paper outlines the key drivers behind the growth of V2G technology in 2025, focusing on government mandates, the grid crisis, rising utility rates, and the crucial role of electric school bus fleets.

V2G Symbiosis with Utility Companies for Grid Stability
For electric vehicles to be widely adopted, widespread charging infrastructure is essential. It must seamlessly integrate with utility grids. All stakeholders—including utility companies, governments, automotive manufacturers, charging solutions providers, and regulatory bodies—are learning they must work together to ensure widespread deployment of charging infrastructure compatible with legacy grid infrastructure and facilitated by evolving regulations.

V2G technology uses latent power storage capacity in EV batteries and sells it to the power grid, thus dramatically reducing the total cost of EV ownership (TCO) and supporting local power grids strained by the combination of aged infrastructure, distribution line load growth, and the rapid integration of variable renewable generation resources like wind and solar. V2G technology can thereby potentially disrupt the entire energy industry by linking latent power capacity and energy stored in millions of EV batteries to support the growing demand for power placed upon the electric grid and absorb the fluctuations in power generation.

V2G enables fleets and individual EV owners to optimize their energy usage while supporting the grid. This symbiotic relationship between V2G technology and utility companies provides stability to the electrical grid and ensures that consumers can take full advantage of energy savings and revenue generation opportunities.

The Grid Investment Gap
Climate change increases the frequency and intensity of extreme weather that wreaks havoc on the power grid. Everything from seasonal wildfires, heat waves, and hurricanes creates a volatile environment for power grids. The grid investment gap continues to grow, triggering resiliency issues.

The U.S. power grid faces increasing instability with the frequency and severity of outages rising due to aging infrastructure, extreme weather, and heightened demand. In 2023, the U.S. experienced over 400 major outages and 2024 has already seen several high-impact events, with more expected as climate-related disasters continue to occur.

Grid reliability is a growing concern for municipalities, businesses, and consumers. Electric vehicles offer a promising solution, particularly bi-directional capable EVs that can be integrated with a V2G technology platform. When aggregated into a virtual power plant by a V2G platform capable of providing complex and valuable grid services, EVs can help stabilize energy systems and prevent blackouts by feeding power back into the grid during peak demand or during outages caused by extreme weather.

School districts that electrify their bus fleets using V2G technology will be able to provide backup power to local grids during times of crisis, turning transportation assets into grid-stabilizing tools.

Power outages are expected to increase in 2025, making V2G technology even more necessary. V2G technology is uniquely positioned to address these challenges by enabling vehicles to serve as mobile energy storage units, providing communities with greater energy resilience and stability.

Grid Congestion: The Biggest Bottleneck to a Fast Transition
The U.S. power grid faces increasing congestion issues with the inflow of distributed energy from renewables installed at its edge. Delays for new interconnections are rising due to aging infrastructure unable to cope with these new reverse flows and requires reinforcement, subject to utilities’ investment plans, permitting, and right-of-way.

EVs can alleviate grid congestions and prevent overloads by absorbing power from the grid during peaks and feeding it back later when aggregated into a virtual power plant by a V2G platform, creating a complex and valuable grid service.

Grid congestion is expected to increase in 2025, making V2G technology even more necessary. V2G technology provides communities with non-wire alternatives to speed up interconnection delays and flexibility to soften congestion.

Rising Utility Rates
As grid instability grows, so do utility rates. Projections for 2025 suggest that electricity prices will rise significantly in urban and rural areas. Several factors contribute to these increases, including the high cost of maintaining aging infrastructure, the integration of renewable energy, the sunk cost of legacy conventional power plants, and the economic impact of climate-related disasters.

In addition, electrification of uses, such as heating, industrial processes, data centers, and EVS, creates the need for increased energy generation as well as sometimes reinforced distribution systems. Upgrading the grid as usual, with even more wires, trenches and transformers, and sized for a theoretical peak, would be prohibitively expensive, boosting the cost of energy even for people who cannot afford the upfront investment required by electrification. For instance, more than 8 million EVs are forecasted to be on the road in California by 2030. If those 8 million EVs were to connect and charge all at once at 10kW, that’s 80GW, which is 53% more than the largest peak ever in the state.

In response to the threat of these rising costs, businesses and consumers are seeking ways to reduce energy expenses. V2G technology enables fleet operators and EV owners to participate in energy markets by returning excess power to the grid during peak demand periods. By doing so, they can offset rising utility costs, push back, and maybe cancel altogether the need for grid reinforcement while generating recurring revenue. V2G technology enables the maximization of the use of the grid’s latent existing capacity, avoiding charging and back feeding when it is saturated, creating leeway for the grid operators before they need to plan for bigger wires and transformers.

Government Mandates Related to Climate Change and Legislation Driving EV Adoption: School Bus Replacement A $3 to $5 Billion Market Opportunity

The tipping point for electric school buses is approaching as school districts across the U.S. prepare to replace more than 24,000 buses by 2025. With electric buses still priced between $300,000 and $400,000, government incentives remain critical in making this transition affordable until recent drops in battery prices percolate to the school bus manufacturers. V2G technology provides school districts with the added advantage of generating revenue through grid services, reducing operating costs, improving resiliency and improving air quality for students and communities.

In the United States, the Bipartisan Infrastructure Law allocated $5 billion over five years to replace dirty existing school buses, with a significant portion of these funds dedicated to electric buses. In addition, the Environmental Protection Agency’s (EPA) Clean School Bus Program offers further financial support to school districts transitioning from diesel to electric buses.

The school bus industry is ripe for a transition impacting the school and the country. Parents are fed up with seeing their kids intoxicated by the diesel fumes. School budgets are strained by the operating costs (maintenance and fuel) of their school bus fleets. There are over 480,000 school buses in the U.S. – it’s an old fleet with an average bus age of 13 years – most of which run on diesel fuel. If fully electrified, the battery capacity from the school bus market alone could create a $3B to $7B market in stored energy value annually.

New climate change legislation could introduce new mandates, requiring stricter emissions regulations and further investments in renewable energy infrastructure. This would directly boost the adoption of V2G technology because of its dual benefit: electrifying transportation and using EVs as energy storage assets to stabilize the grid during peak demand or emergencies.

Accelerating EV Adoption
The lack of charging infrastructure, especially in low-income areas and along inter-city routes, has significantly challenged the widespread adoption of EVs. Companies are working to bridge this gap by installing charging stations in high-traffic locations, such as convenience stores, shopping malls, and hotels, ensuring that all cars and van EV owners can access reliable charging. For commercial heavy-duty electric vehicles, the energy needs are even higher, and high-power charging is needed at depots, warehouses, logistics centers, ports, and alongside the made truck transit routes. But more power comes along with more capability to provide the grid with the flexibility it needs thanks to V2G technology.

As the U.S. and other global markets continue to electrify, V2G technology will play a vital role in transforming the energy landscape. V2G solutions contribute to a more resilient and cleaner energy future by turning EVs into mobile energy storage assets. The U.S. ancillary services market for power exceeded $8.0B in 2022 and is expected to reach $17B by 2031. This growth is driven by the proliferation of new distributed energy resources, including renewable (behind-the-meter) energy sources and electric vehicles.

Summary: A Tipping Point for V2G Technology in 2025
The trifecta of electrification of end-uses, transportation, and grid crises create the perfect environment for the widespread adoption of V2G technology. As we move into 2025, the need for reliable, efficient, and scalable energy solutions has never been greater. V2G technology is poised to meet this demand by empowering energy consumers into active electricity prosumers, improving grid reliability, and providing recurring revenue opportunities, savings and resiliency for both fleet operators and individual EV owners.