Electric automobile drivers may earn £725 a yr below new Government vehicle-to-grid plans – however what’s it?
Ministers are reportedly considering incentives for British carmakers that fit their latest electric vehicles with vehicle-to-grid (V2G) technology – and motorists can earn hundreds of pounds per year by using it.
But what on earth is V2G?
Simply put, it turns an electric car into a rolling power bank.
The technology enables drivers to automatically charge their cars when electricity is cheapest, then sell any unused energy back to the grid during periods of high demand when prices are at their highest. And the payoff is an estimated £725 a year.
Only around 27 new EV models currently on sale offer the feature. But that could change under new Government plans.
According to The Guardian, Labour is keen to encourage British carmakers to provide the tech in new models to help balance energy supplies when renewable generation is low and ease pressure on the National Grid.
Manufacturers would benefit from ‘credits’ for selling V2G-equipped EVs, which would be used towards complying with the Zero Emission Vehicle (ZEV) mandate, the UK’s legally binding sales targets designed to accelerate the transition to EVs.
However, critics have questioned whether the technology can be scaled up quickly enough.
And green campaigners have raised concerns that manufacturers could take advantage of the incentives to continue selling petrol cars for longer.
Ministers are said to be considering ‘credits’ for carmakers that install vehicle-to-grid tech in new EVs. We explain what it is, how it works and how you could earn £725 a year from it
The basics behind Vehicle-to-Grid
V2G technology allows energy to be sent back from an electric car’s battery into the mains electricity network, creating a two-way flow of power.
Through bi-directional charging, a vehicle can charge when plugged in and then discharge stored electricity back to the grid when national demand surges.
Signals triggered by periods of high energy consumption or low power generation can automatically initiate the transfer of energy from the vehicle.
Alex Schoch, director of electrification at Octopus Energy, said: ‘Your electric car could do more than get you from A to B. With V2G technology, it can help power your home, sell electricity back to the grid when it’s needed most, and earn you money while it’s parked.
‘It turns your car from a cost into an asset, helping drivers save hundreds on bills while making the most of Britain’s clean energy.’
How drivers can earn money from V2G
While improved grid stability benefits the public as a whole, individual drivers also stand to profit directly from V2G technology.
It allows EV owners to monetise the energy stored in their car batteries by selling it back to the grid during peak-demand periods, potentially earning between 5p and 30p per kilowatt-hour (kWh).
A recent trial by Octopus Energy using its Power Pack tariff, the UK’s first V2G tariff, found users could save up to £620 a year compared with its Flexible Octopus tariff, and £161 compared with Intelligent Octopus Go.
Similarly, a 2021 Government-backed study by OVO Energy, Kaluza and Nissan found some trial participants earned as much as £725 a year simply by leaving their vehicles plugged in when not in use.
However, these figures are not guaranteed and could change considerably as V2G technology becomes more widely adopted.
A 2026 study found EV batteries could almost double the amount of energy storage capacity available to the grid.
V2G could save Britain billions – but hurdles remain
The UK is targeting a clean electricity grid by 2030 and net-zero greenhouse gas emissions by 2050, backed by the Great British Energy Act and the Seventh Carbon Budget published in June 2026.
Using millions of EV batteries to help balance the grid when wind and solar generation falls could reduce reliance on costly backup power stations, potentially saving Britain billions.
The 2021 study estimated V2G could save up to £3.5billion a year through reductions in grid infrastructure, storage and generation costs.
If 50 per cent of the estimated 11 million EVs expected on UK roads by 2030 were V2G-enabled, energy regulator Ofgem estimates they could provide around 16 gigawatts (GW) of flexible daily capacity to the grid.
However, significant barriers remain, including limited vehicle compatibility, the high upfront cost of specialist home chargers, installation delays and complex certification requirements.
Environmental groups have also warned that awarding credits for V2G technology could have unintended consequences by allowing carmakers to continue selling higher-emission petrol vehicles.
Ben Nelmes, chief executive of green transition think tank New AutoMotive, told The Guardian: ‘Vehicle-to-grid is exciting technology that could help balance the grid and cut bills, but carmakers should only be rewarded if it’s actually used, not just for fitting it.’
He added: ‘Under these proposals, one or even two extra credits worth around £4,000 each would hand manufacturers thousands per car for kit that costs a few hundred pounds, even though few drivers own the expensive charger needed to use it.
‘Ministers should make sure the people who benefit from V2G are drivers and billpayers, not carmakers’ shareholders.’
This is Money has contacted the Department for Transport for comment.
