IEEE Electrification - June 2019 - 34

The aim of this
article is to study
the extra potential
value of EVs to end
users, EV fleet
aggregators, utility
companies, and
system operators.

include high vehicle costs and lack of
a clear economic justification for
manufacturers and end users. The EV
industry still relies on federal and
state subsidies, and there is a debate
about whether the industry can stand
on its own feet without these supports. Currently, the major force
behind federal and state efforts to
promote EVs is clean transportation
goals, and the only economic incentive for EV users is the fuel cost savings. The aim of this article is to study
the extra potential value of EVs to end
users, EV fleet aggregators, utility
companies, and system operators. The objective is to
improve the economic justification for EVs and encourage
deployment of the technology, not only because of environmental concerns but also for the services it can provide in terms of grid reliability, security, and resilience.

EV and Electricity Markets
The current power grid faces a future for which it was
not designed. This includes dealing with high variability
in power supply due to large-scale integration of renewable energy resources, a rapidly aging infrastructure that
threatens grid resilience and reliability, and the additional burden placed on the grid by the widespread
adoption of EVs. Although high demand and the stochastic nature of EV loads might be considered as challenges for grid operation, the EV as a mobile and flexible
energy storage system brings new opportunities to
manage the grid. EVs are assets in the grid that can
address future challenges by providing grid services traditionally reserved for conventional generation resources such as peaking units and battery storage systems.
Proper coordination and optimal charging of EVs enable
them to participate in energy and ancillary service markets across the network.
According to a U.S. Department of Transportation
report, personal vehicles in the United States were driven
for 56.1 min/day on average in 2009. While they are parked
for about 23 h/day, these EVs could achieve the secondary
purpose of providing valuable services to the grid, including ancillary services, emergency backup power, and
demand profile leveling, on a daily basis. This could help
the local and state-wide community improve the economics and reduce environmental costs of stable power, prevent black-out scenarios, and reduce the timing
imbalance between peak demand and renewable energy
production, besides contributing to greenhouse gas emissions reductions.
The California Independent System Operator (CAISO)
offers wholesale market aggregators the proxy demand
resource (PDR) product, which enables aggregators to offer
demand-response resources directly into the wholesale

I E E E E l e c t r i f i cati o n M agaz ine / J UN E 2019

energy and ancillary service markets.
It also allows non-generator resources
(NGRs) to bid their 15-min capacity
into the regulation market. PDR
resources can bid economically into
the following markets: 1) the dayahead energy market with a minimum load curtailment of 100 kW, 2)
the day-ahead and real-time nonspinning reserve market with a minimum load curtailment of 500 kW, and
3) the 5-min real-time energy market.
Additionally, smaller loads may be
aggregated to achieve minimum load
curtailment. It should be noted that
PDR is only a load curtailment product and is not enabled
for load increase.
In this article, we show how EVs as deferrable loads can
participate in electricity markets and be optimally shifted
to various timespans and so meet grid objectives in different markets. In the following, we discuss some of the
potential programs for EV participation and then present
a real-world case study, including detailed specifications
of the EV fleet and quantified benefits.

Time-of-Use Tariff Structure
To alleviate stress on the grid and reduce load during peak
demand hours, utilities in California offer time-of-use
(TOU) pricing, which includes lower prices during lowdemand periods. EV owners can benefit from this program
and reduce their bills by cooperating with utility companies in distributing the loads over time and improving the
load factor. In California, for commercial customers under
the TOU tariff structure, two categories of costs are generally applied: energy charge and demand charge. Energy
charges are calculated as the product of electricity energy
amount, measured in kilowatt hours (kWh) per time period, and the per-kWh rate corresponding to the time period. Demand charge is calculated based on the maximum
power measured in each demand period multiplied by the
corresponding demand charge rate, in US$/kW. Adopting
an optimal EV charging schedule and/or equipping EVs
with vehicle-to-grid (V2G) capability (i.e., sending energy
back to the grid during peak demand) can minimize
monthly energy bills and contribute to reducing the load
on the power grid.

Peak-Day Pricing Plan
Peak-day pricing (PDP) is a time-varying rate structure that
offers higher rates during peak-usage periods and lower
rates at other times. The higher-rate events typically occur
on the hottest days of the summer. According to Pacific
Gas and Electric (PG&E), customers participating in PDP
can expect between nine and 15 PDP event days in addition to TOU pricing each year. On event days, an extra
charge is added to the regular TOU rate during the peak

IEEE Electrification - June 2019

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