diff --git a/config/config.default.yaml b/config/config.default.yaml
index 73a89a5ee..2ee23ef9b 100644
--- a/config/config.default.yaml
+++ b/config/config.default.yaml
@@ -499,7 +499,7 @@ sector:
   EV_lower_degree_factor: 0.98
   EV_upper_degree_factor: 0.63
   bev_dsm: true
-  bev_availability: 0.5
+  bev_dsm_availability: 0.5
   bev_energy: 0.05
   bev_charge_efficiency: 0.9
   bev_charge_rate: 0.011
diff --git a/doc/configtables/sector.csv b/doc/configtables/sector.csv
index 71e149fed..ba87e2d7d 100644
--- a/doc/configtables/sector.csv
+++ b/doc/configtables/sector.csv
@@ -40,13 +40,13 @@ EV_lower_degree_factor,--,float,Share increase in energy demand in electric vehi
 EV_upper_degree_factor,--,float,Share increase in energy demand in electric vehicles (EV) for each degree difference between the hot environment and the maximum temperature.
 bev_dsm,--,"{true, false}",Add the option for battery electric vehicles (BEV) to participate in demand-side management (DSM)
 ,,,
-bev_availability,--,float,The share for battery electric vehicles (BEV) that are able to do demand side management (DSM)
+bev_dsm_availability,--,float,The share for battery electric vehicles (BEV) that are able to do demand side management (DSM)
 bev_energy,--,float,The average size of battery electric vehicles (BEV) in MWh
 bev_charge_efficiency,--,float,Battery electric vehicles (BEV) charge and discharge efficiency
 bev_charge_rate,MWh,float,The power consumption for one electric vehicle (EV) in MWh. Value derived from 3-phase charger with 11 kW.
 bev_avail_max,--,float,The maximum share plugged-in availability for passenger electric vehicles.
 bev_avail_mean,--,float,The average share plugged-in availability for passenger electric vehicles.
-v2g,--,"{true, false}",Allows feed-in to grid from EV battery
+v2g,--,"{true, false}","Allows feed-in to grid from EV battery. This is only enabled if BEV demand-side management is enabled, and the share of vehicles participating is V2G is given by `bev_dsm_availability`."
 land_transport_fuel_cell _share,--,Dictionary with planning horizons as keys.,The share of vehicles that uses fuel cells in a given year
 land_transport_electric _share,--,Dictionary with planning horizons as keys.,The share of vehicles that uses electric vehicles (EV) in a given year
 land_transport_ice _share,--,Dictionary with planning horizons as keys.,The share of vehicles that uses internal combustion engines (ICE) in a given year. What is not EV or FCEV is oil-fuelled ICE.
diff --git a/doc/release_notes.rst b/doc/release_notes.rst
index f9fb8ccf0..c62580266 100644
--- a/doc/release_notes.rst
+++ b/doc/release_notes.rst
@@ -103,6 +103,8 @@ Upcoming Release
 
 * Updated osm-prebuilt base network to version 0.5, for changelog, see https://zenodo.org/records/13981528
 
+* Bugfix: vehicle-to-grid dispatch capacity is now limited by the fraction of vehicles participating in demand-side-management, halving the dispatch capacity under the default demand-side management participation rate of 0.5.
+
 
 PyPSA-Eur 0.13.0 (13th September 2024)
 ======================================
diff --git a/scripts/prepare_sector_network.py b/scripts/prepare_sector_network.py
index f0012bf79..b9d7e842a 100755
--- a/scripts/prepare_sector_network.py
+++ b/scripts/prepare_sector_network.py
@@ -1831,25 +1831,11 @@ def add_EVs(
         efficiency=options["bev_charge_efficiency"],
     )
 
-    if options["v2g"]:
-        n.add(
-            "Link",
-            spatial.nodes,
-            suffix=" V2G",
-            bus1=spatial.nodes,
-            bus0=spatial.nodes + " EV battery",
-            p_nom=p_nom,
-            carrier="V2G",
-            p_max_pu=avail_profile.loc[n.snapshots, spatial.nodes],
-            lifetime=1,
-            efficiency=options["bev_charge_efficiency"],
-        )
-
     if options["bev_dsm"]:
         e_nom = (
             number_cars
             * options["bev_energy"]
-            * options["bev_availability"]
+            * options["bev_dsm_availability"]
             * electric_share
         )
 
@@ -1865,6 +1851,20 @@ def add_EVs(
             e_min_pu=dsm_profile.loc[n.snapshots, spatial.nodes],
         )
 
+        if options["v2g"]:
+            n.add(
+                "Link",
+                spatial.nodes,
+                suffix=" V2G",
+                bus1=spatial.nodes,
+                bus0=spatial.nodes + " EV battery",
+                p_nom=p_nom * options["bev_dsm_availability"],
+                carrier="V2G",
+                p_max_pu=avail_profile.loc[n.snapshots, spatial.nodes],
+                lifetime=1,
+                efficiency=options["bev_charge_efficiency"],
+            )
+
 
 def add_fuel_cell_cars(n, p_set, fuel_cell_share, temperature):
     car_efficiency = options["transport_fuel_cell_efficiency"]