Valuing Demand Response on Electric Vehicles Charging

Abstract

AbstractElectricity spot prices in emerging electricity markets exhibit high volatilities and occasional distinctive price spikes due to the non-storable nature of electricity. Furthermore, the inherent variability and uncertainty of renewable energy generation require balancing supply and demand all the time for electric power systems. In the context of reliable electricity service, demand response (DR) programs allow end-users to adapt their electricity usage to changes in the price of electricity over time. DR programs include price-based and incentive-based DR programs. Real-time pricing (RTP) is a price-based DR program, which charges customers (electric vehicle (EV) users) electricity rates based on the utility’s real-time production costs. In this paper, we propose a financial option that can be used as additional incentives to RTP, which reinforce the encouragement to customers shifting their electric usage aligning the renewable energy supply peak. We value three different price-based DR programs on EVs charging through the average daily electricity cost. Through a realistic study of Hourly Ontario Energy Price (HOEP) in the electricity market, the feasibility of the valuation methodology is demonstrated. Finally, the result of the study shows that the proposed DR program allows electricity utilities to dynamically optimize electric grid operations without increasing the price volatility and provide more reliable service to consumers at a lower price.