Collaborative Vehicle-to-grid Operations in Frequency Regulation Markets

Manufacturing & Service Operations Management, Forthcoming

45 Pages Posted: 5 Oct 2021 Last revised: 8 Feb 2024

See all articles by Ho-Yin Mak

Ho-Yin Mak

University of Oxford - Said Business School

Runyu Tang

Xi'an Jiaotong University (XJTU) - School of Management

Date Written: February 1, 2024

Abstract

Problem definition: We study the operations of electric vehicles (EVs) providing frequency regulation services to the electric grid in vehicle-to-grid (V2G) systems. In particular, individually-owned EVs collaboratively bid in the regulation market, coordinated by a platform that operates the network of charging equipment. We study how the platform determines optimal pricing incentives for drivers to plug in their EVs, accounting for heterogeneous driving schedules.

Methodology and Results: We model the platform's pricing optimization problem as a bilevel program: At the upper level, the platform determines hourly rebates for EV owners to plug in their EVs, and capacity bids in the regulation market; at the lower level, individual travelers optimize their travel and charging schedules in response to pricing incentives. To account for uncertainties and heterogeneity in regulation market prices and travel patterns, we adopt distributionally-robust optimization techniques to formulate the problem as a mixed-integer second-order cone program.
We conduct a computational study based on the California Household Travel Survey dataset and actual frequency regulation prices. Our results show that the ability to offer time-varying rebates and install workplace chargers can significantly improve the V2G platform's expected profits.

Managerial implications: As EV adoption progresses past the nascent stage, V2G business models become more viable. Successful implementation of V2G provides economic incentive for switching to EVs and potentially helps sustain adoption growth, and complements the growth of renewable power by helping stabilize the grid. Our findings shed lights on the design of driver incentives for V2G systems.

Suggested Citation

Mak, Ho-Yin and Tang, Runyu, Collaborative Vehicle-to-grid Operations in Frequency Regulation Markets (February 1, 2024). Manufacturing & Service Operations Management, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3935760 or http://dx.doi.org/10.2139/ssrn.3935760

Ho-Yin Mak (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Runyu Tang

Xi'an Jiaotong University (XJTU) - School of Management ( email )

Shaanxi Province 710049
China

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