Charging smart for profit and benefit

By Alistair Jones

SMU Office of Research & Tech Transfer – Sleek and largely silent, electric vehicles (EVs) are gliding up to traffic lights in ever increasing numbers. In 2012, about 130,000 EVs were sold worldwide. Today, that many are sold each week, according to the International Energy Agency (IEA).

The IEA further reports that in 2021, EV sales more than doubled to 6.6 million, representing close to 9 percent of the global car market and more than tripling their market share from two years earlier. All the net growth in global car sales in 2021 came from EVs.

While EVs have zero tailpipe emissions when compared with petrol- or diesel-powered vehicles, they still contribute to emissions because the electricity used to charge their batteries is largely generated from carbon-based fuel sources.

As the popularity of EVs grows, their charging needs will put new demands on energy grids, particularly if everyone wants to charge at the same time, and as quickly as possible. And charging during periods of peak energy demand, when the more heavily polluting generators kick in, will add to harmful emissions.

Enter smart charging. This is a system where an EV and a charging device share a data connection, and the charging device shares a data connection with a charging operator. It enables individualised charging that can be better aligned with the fluctuating demands put on energy networks – and the varying prices they command to ensure supply.

“We need smart charging to manage this charging service so that we don't put unnecessary stress on the grid and cause unnecessary emissions,” says Yangfang Helen Zhou, an Associate Professor of Operations Management at Singapore Management University (SMU).

It pays to wait

Professor Zhou is a co-author of a recent study that highlights how smart charging can be an innovative business model for utility firms as well as providing environmental benefits.

The procurement cost of electricity and associated emissions varies significantly during a day, so substantial savings can be achieved by smart charging – delaying charging until the cost is lower.

The researchers have analysed the key trade-off between the charging cost and a customer's inconvenience cost in having to wait. They propose an easy-to-implement policy for determining an optimal charging schedule for each vehicle to minimise the overall charging cost.

“As a general principle, the price is higher if the charging duration is shorter,” Professor Zhou says. This incentivises customers who are not pressed for time to choose later completion times.

The researchers suggest utility firms should design pairs of charging price and completion times in either minimising total cost or maximising profit. Customers can choose the pair that best suits them when they arrive at the charging station.

At the heart of this smart charging process is a “greedy” yet optimal algorithm, described by the researchers as a “juice-filling policy” to manage the scheduling of charging.

“You can think of each vehicle’s battery as a container that is yet to be filled with juice. You fill the battery of the EV that is supposed to leave first, and then decide on the next and then the next,” Professor Zhou says.

“It's a way to smooth out the charging over time.”

A combination of players

The researchers consider both commercial utilities and non-profit public utilities and find the impact of smart charging is comparable in each case.   

“You can think of the public utility firm as a social welfare maximiser, and the private utility firm as a profit maximiser. But the profit maximiser utility firm will behave very similarly to the social welfare maximiser,” Professor Zhou says.

The researchers illustrate their findings with real electricity demand and supply data from PJM Interconnection, the largest wholesale electricity market in the US, which serves 65 million customers across 13 states.

The analysis shows that compared with current practice, smart charging leads to approximately 20 percent cost savings and 15 percent CO2 emissions reductions in a typical summer month. Moreover, most of these benefits can be achieved by implementing smart charging on only a few peak-demand days.

If the operation of charging stations by utility firms can lead to significant cost and emissions savings, would the charging market be best managed by utility firms?

“I don't think it's a matter of whether this should be best managed by utility firms, but they are in a good position because they're the ones that are supposed to procure additional generators to satisfy the increasing EV charging demand,” Professor Zhou says.

“There are entities such as EV aggregators and commercial charging stations that could also provide the services well. It needs a combination of all players.”

Feeding the grid

It is estimated the EV transformation will require $50 billion of investment in charging stations across the US, Europe and China by 2030. Other countries such as Singapore and Australia are also grappling with the need to build more infrastructure.

“That's one thing that's very important for governments to do… because right now, a major issue is that we don't have the infrastructure to potentially satisfy EV charging demand,” Professor Zhou says.

One EV battery typically contains as much energy as an average household uses in a two-to-four-day period. It is a resource that has given rise to an emerging development – discharging power from a vehicle back into the electricity grid (V2G).

An example would be to sell a car's power into the grid during evening peak when home appliance use is most pronounced (5pm to 9pm), and then recharge the car off-peak after 10.30pm. The exchange can result in a small profit for the EV owner.

At this stage, bi-directional chargers are expensive and very few EVs are set up for V2G. The Nissan Leaf is presently the only V2G-enabled model available in Singapore.

But it points to the future and V2G is another research direction for Professor Zhou.

“I'm currently exploring a business model for V2G,” she says. “It is a blood donation model for an EV aggregator, which aggregates a large amount of EVs and discharges EVs, at most, a few times a year to reduce battery degradation.

“If you limit the number of times of discharging, the degradation for each battery will be a bare minimum but the benefit for the grid of aggregating a large number of EVs will be substantial.”

Back to Research@SMU November 2022 Issue