Vehicle-to-grid (V2G) energy transfer in a smart grid environment opens a new revenue opportunity for electric-drive vehicles (EVs), and might reduce grid operation costs in demand-constrained urban feeders where peak-electricity prices are high. This paper analyses the peak demand energy market for V2G in the urban region of Florianopolis, Brazil. The article describes known V2G-concepts and introduces two different dispatch strategies developed for the Brazilian energy market in the light of new tariff regulations, which are expected to go into effect starting in 2014. It turns out that electric-drive vehicles may be used as a grid-stabilisation strategy, but the announced tariff regulations may lead to a destabilisation if there are too many cars offering their internal storage for V2G grid support. Adequate energy policy strategies must be introduced to avoid the conflicting interests that might stem from the different perspectives of grid operators and EV owners. In contrast to previous analyses, this research assumes the battery degradation as a function of depth of discharge (DOD), which is known for a specific battery. (C) 2014 Elsevier Ltd. All rights reserved.