Urban Infrastructure
About the Project
Electric vehicles are on a mission to transform mobility by providing an eco-friendly alternative to traditionally fueled vehicles. The transformation will be even more evident in smart cities, necessitating significant investment in charging stations. Across the US, Europe, and China, experts predict that over $50 billion will need to be invested into building charging stations.
In practice, when an EV is plugged in, the charging station completes charging as soon as possible, but this practice may result in unnecessarily high costs and emissions. This is because when a vehicle is plugged in, the electricity demand may be already extremely high - for example, on a hot summer day with a sudden dip in the solar power generation, so the additional electricity demand has to be satisfied by peak power plants, which are usually more expensive, and generate more greenhouse emissions per unit of electricity generated. But not all users need an ultra-fast charge, and may not need to use their car until much later. For instance, some may be working nearby and not need their cars until several hours later. In this case, it could be possible to reduce both the cost of electricity generation and any emissions by smart charging, that is to say, delaying charging these electric batteries to a time when the cost of electricity is lower. However, utility firms do not know which drivers can and cannot delay their charging, as this is the drivers’ private information. So, utility firms could potentially use charging prices to encourage drivers who can delay charging to pick their electric vehicles later. We use a mechanism design approach to design a ‘price menu’ which would incentivise drivers. In particular, the price menu would specify a certain price for a given duration to charge the vehicle. For instance, during the afternoon, the price for charging is 8 dollars, if you need your vehicle in three hours; the price will drop to 6 dollars if you don’t need your vehicle for four hours; and it further drops to 5 dollars if you can wait for five hours. The longer the charging duration, the more flexibility the utility firm has in terms of managing the charging. Therefore, the utility firm can potentially reduce the total charging cost. As a result, the utility firm can pass the cost savings to these drivers who are able to delay charging their vehicles for longer. This is a win for the electric grid, and a win for electric vehicle drivers as well.
We implemented the proposed smart charging mechanism using the electricity price and emissions data from PJM Interconnection, the largest electricity wholesale market in the U.S. We found that, when compared with the current practice of charging the vehicles as quickly as possible, the proposed smart charging mechanism can reduce average generation cost by nearly 20% during a typical summer month. In addition, it can also reduce emissions by approximately 15%.
In practice, when an EV is plugged in, the charging station completes charging as soon as possible, but this practice may result in unnecessarily high costs and emissions. This is because when a vehicle is plugged in, the electricity demand may be already extremely high - for example, on a hot summer day with a sudden dip in the solar power generation, so the additional electricity demand has to be satisfied by peak power plants, which are usually more expensive, and generate more greenhouse emissions per unit of electricity generated. But not all users need an ultra-fast charge, and may not need to use their car until much later. For instance, some may be working nearby and not need their cars until several hours later. In this case, it could be possible to reduce both the cost of electricity generation and any emissions by smart charging, that is to say, delaying charging these electric batteries to a time when the cost of electricity is lower. However, utility firms do not know which drivers can and cannot delay their charging, as this is the drivers’ private information. So, utility firms could potentially use charging prices to encourage drivers who can delay charging to pick their electric vehicles later. We use a mechanism design approach to design a ‘price menu’ which would incentivise drivers. In particular, the price menu would specify a certain price for a given duration to charge the vehicle. For instance, during the afternoon, the price for charging is 8 dollars, if you need your vehicle in three hours; the price will drop to 6 dollars if you don’t need your vehicle for four hours; and it further drops to 5 dollars if you can wait for five hours. The longer the charging duration, the more flexibility the utility firm has in terms of managing the charging. Therefore, the utility firm can potentially reduce the total charging cost. As a result, the utility firm can pass the cost savings to these drivers who are able to delay charging their vehicles for longer. This is a win for the electric grid, and a win for electric vehicle drivers as well.
We implemented the proposed smart charging mechanism using the electricity price and emissions data from PJM Interconnection, the largest electricity wholesale market in the U.S. We found that, when compared with the current practice of charging the vehicles as quickly as possible, the proposed smart charging mechanism can reduce average generation cost by nearly 20% during a typical summer month. In addition, it can also reduce emissions by approximately 15%.
Principal Investigator(s)
Yangfang (Helen) Zhou - Singapore Management University
Associated Publications
WU, Owen; YUCEL, Safak; and ZHOU, Yangfang (Helen). Smart charging of electric vehicle: An innovative business model for utility firms. (2022). Manufacturing and Service Operations Management. 24, (5), 2481-2499.