The government will invest almost £30 million in new technology that will allow electric vehicles to feed electricity back into the grid.

Vehicle-to-grid (V2G) technology would enable electric vehicles to send energy back into the grid during peak times, where it can then be used to provide power for heating or lighting, rather than using peak-rate electricity from power stations.

During off-peak times, the battery could be recharged at a lower price, theoretically saving the owner money.

The government’s £30 million fund will pay for 21 research, design and development projects, with the aim of trialling the technology and exploring commercial opportunities.

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In Oxford, EDF Energy will lead a large-scale demonstration of the technology using a fleet of 100 electric cars and vans from organisations such as delivery firms and taxi companies. The ‘V2GO’ project will explore whether the technology has any use in a business application.

Transport Minister Jesse Norman said V2G charging represented a ‘huge opportunity’ for electric vehicles to play a part in the country’s energy distribution.

‘As the number of electric vehicles grows and their battery capabilities increase, there is a huge opportunity for them to make a significant contribution to a smart grid,’ he said. ‘These projects are at the cutting edge of their field. Just like the visionary designs of Brunel and Stephenson in transport, they could revolutionise the ways in which we store and manage electricity, both now and in the future.’

Business Minister Richard Harrington said the investment would ‘showcase’ Britain’s capabilities in environmentally-friendly technology.

‘The UK’s automotive industry is a great British success story, and we are determined to lead the way in innovative, low-emission vehicle production,’ he said. ‘We have shown that growing the economy while cutting emissions, can, and should, go hand in hand. Vehicle-to-grid technology provides another opportunity for the UK to showcase to the world our leading expertise in game-changing automotive and low-carbon technologies.’