The EV charging industry is evolving, striving to keep pace with the rapid adoption of electric vehicles. One of the biggest challenges slowing its expansion is grid capacity constraints. As demand for charging infrastructure rises, deploying charging stations in key locations becomes difficult if the local grid cannot support additional load. Yet, the ability to quickly respond to emerging charging needs is essential for maximizing return on investment.
By 2035, electric vehicles could account for 6-8% of global electricity demand, up from just 0.5% today. This surge underscores the urgent need for smarter energy management and strategies that incentivize EV drivers to participate in grid flexibility programs.
Let’s explore how energy flexibility and flexibility markets can unlock new opportunities in EV charging.
Energy flexibility in EV charging: main terms decoded
Flexibility services have emerged in response to three key developments: changes in traditional grid distribution, the growth of renewable energy sources, and peak electricity demand periods driven partly by EV charging. Today’s electricity distribution has shifted from a linear model to a decentralized system, creating what we now call a Decentralized/Smart grid. This modern grid architecture integrates two-way communication technologies, distributed energy resources, and intelligent control systems that enable real-time monitoring and management of electricity flows at all levels of the network. In this new framework, each stage of electricity procurement involves distinct market participants who fulfill critical roles in the electricity marketplace.
This transformation has given rise to specialized trading venues where these capabilities are monetized. Electricity and flexibility markets operate as power exchange platforms where specific flexibility commodities are traded. They mainly represent the difference between the original electricity demand and the adjusted demand created through incentivized consumption changes. For example, when a household reduces its electricity usage in response to incentives, it creates a new demand curve. The gap between the theoretical and the actual consumption becomes a tradable asset in flexibility markets.
The Supply side
On the supply side are the flexibility service providers (FSPs): entities that provide flexibility services by adjusting their energy production or consumption patterns. These could include aggregators, industrial consumers, residential consumers with smart devices, energy storage operators, and renewable generators.
The Demand Side
Grid companies like TSOs and DSOs are on the demand side of the flexibility market. These utilities seek flexibility solutions to address grid stability challenges caused by renewable energy integration and consumption peaks at specific times of day. They establish criteria for the flexibility they need, creating market opportunities for suppliers.
CPOs’ participation in flexibility markets
CPOs typically participate in flexibility markets indirectly through specialized aggregators. They establish formal contractual relationships with these aggregators and develop flexibility assets based on market requirements. Based on these agreements, CPOs can generate additional revenue streams from assets traded on the flexibility market.
CPOs often face regulatory obligations concerning grid stability that require them to comply with consumption limitations requested by DSOs. However, it’s important to note that these regulations typically originate from government regulators rather than directly from DSOs. Regulators establish a balanced framework where CPOs must respect grid limitations. These arrangements are commonly implemented through structured demand-response programs.
Flexibility assets
A flexibility asset can adjust its electricity consumption or production. On the consumption side, we have demand-side assets: EV charging infrastructure, smart home devices, and industrial systems with adjustable power consumption. On the production side, we have generation assets like distributed energy resources (DERs), including solar panels, wind turbines, and gas generators. Energy storage systems function as both consumption and production resources, enabling bidirectional flexibility. Aggregators serve as market facilitators by combining multiple smaller flexibility assets from diverse sources into unified, larger resources with greater market value, enabling more minor participants to collectively access flexibility markets they couldn’t reach individually.
Energy flexibility in a nutshell
Simply put, energy flexibility in EV charging refers to the ability to dynamically adjust power consumption in response to flexibility market signals. For CPOs to participate in delivering flexibility services, they first need to integrate with local Distribution System Operators (DSOs) or flexibility aggregators
Business opportunities for CPOs in flexibility markets
CPOs and their respective Charge Point Management Systems (CPMS) hold valuable insights into EV drivers’ charging behavior. This data can be leveraged by various flexibility market players to forecast the EV drivers’ behavior, and based on these predictions, a more sustainable flexibility request can be created. This significant competitive advantage can be achieved by implementing proven ways to control the electricity demand.
A single flexibility asset in EV charging might represent a circuit, electric vehicle supply equipment (EVSE), or charging point that can respond to third-party requests. This can be done by leveraging mechanisms like smart charging scheduling and dynamic load management.
When a flexibility asset is created in a CPMS, it generates historical data capturing consumption patterns. This data supports consumption forecasting for a certain period ahead, including predictions about home charging behavior patterns, which helps optimize flexibility potential.
CPOs can generate revenue from flexibility assets in EV charging through mechanisms that optimize energy costs, participate in energy markets through agreements with flexibility aggregators, and provide value-added services. Here are key ways they can monetize flexibility:
1. Demand Response Programs
CPOs can adjust charging loads in response to grid signals and get paid by utilities or grid operators for reducing demand during peak hours. By participating in demand response programs, they help balance the grid while earning financial incentives.
2. Time-of-Use (ToU) Optimization
By leveraging time-varying electricity rates, CPOs can schedule charging sessions when electricity prices are lower, increasing their profit margins while offering competitive pricing to customers.
3. Vehicle-to-Grid (V2G) Services
CPOs can enable bidirectional charging, allowing EVs to supply power back to the grid during peak demand periods. They can charge customers for this service, receive payments from grid operators for providing grid-balancing capabilities, or implement revenue-sharing models where EV owners receive a portion of the flexibility payments.
4. Battery Energy Storage Systems (BESS) Monetization
By integrating stationary battery storage, CPOs can store energy when it’s cheap and use it during peak times, reducing energy procurement costs. They can also sell stored energy back to the grid or offer backup power solutions to businesses.
5. Renewable Energy Arbitrage
CPOs that integrate solar or wind energy into their charging infrastructure can sell excess renewable power back to the grid or store it for later use, taking advantage of feed-in tariffs and other incentives.
6. Premium Smart Charging Services
Smart charging services connect to flexibility markets through a strategic value proposition where CPOs leverage customer preferences for premium charging experiences to create marketable flexibility resources. By offering differentiated pricing based on charging speed, prioritization, or green energy usage, CPOs can introduce subscription models and premium plans for customers willing to pay for faster or greener charging.
Navigating the Path to Flexibility Market Participation
While CPOs face initial challenges when entering flexibility markets—including technical upgrades to existing infrastructure and navigating regional regulatory differences—these hurdles are increasingly being overcome through strategic approaches. Forward-thinking operators are finding that investments in advanced control capabilities, though requiring upfront capital, lead to valuable new revenue streams as market mechanisms mature.
Many CPOs are now successfully balancing grid service obligations with customer experience by implementing smart charging solutions that satisfy both needs simultaneously. Partnerships with experienced aggregators are proving especially valuable, providing smaller operators with market access while simplifying the complexities of flexibility participation—ultimately creating pathways for CPOs of all sizes to capitalize on this growing opportunity.
Building Strategic Momentum with AMPECO
Despite the hurdles of entering these specific markets, forward-thinking CPOs should develop strategic roadmaps to build flexibility capabilities progressively. This market represents a significant long-term revenue opportunity as transportation electrification accelerates, and CPOs should recognize that. By carefully selecting initial market segments and establishing foundational partnerships, forward-thinking operators can capture early revenue opportunities while positioning for broader market participation as technical capabilities mature and regulatory landscapes evolve.
AMPECO continually seeks innovative approaches to remain a trusted partner for CPOs investing in long-term business opportunities. This is why we have already implemented capabilities that help aggregators and CPOs create flexibility assets and integrate with various systems to respond effectively to flexibility requests. Our platform simplifies the operational transition and combined with expertise gained through collaborations with diverse flexibility operators, we enable CPOs to make informed decisions regarding flexibility trading.
Unlock new revenue streams by integrating your EV charging infrastructure with flexibility markets. Let AMPECO show you how to capitalize on this growing opportunity.
