Market Design for Electric Vehicles
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ENERGY MARKETS (R SIOSHANSI AND A MOUSAVIAN, SECTION EDITORS)
Market Design for Electric Vehicles Claire Weiller 1 & Amy Tianjiao Shang 2 & Paige Mullen 1 Accepted: 29 September 2020 # Springer Nature Switzerland AG 2020
Abstract Purpose of Review The recent growth in global electric vehicle (EV) sales has stimulated the development of new charging technologies and ways for EVs to become active participants in the energy system. However, markets were historically not designed for distributed, small-scale assets like EVs and still pose barriers to entry. In which markets do electric vehicles provide services today? Which designs are most suited to incentivise EV services, centrally operated markets, or decentralised price signals? Recent Findings EV flexibility has been recognised as tradable in day-ahead (wholesale) and intraday markets, frequency regulation, demand response, and DSO congestion markets. However, operational examples of EVs participating in these markets are scarce. Our case studies from the UK, the US, the Nordics, and Hong Kong show that high technical barriers still limit EV penetration in frequency regulation and wholesale energy markets, where at least two intermediaries are required: an aggregation partner and a trading access partner. Demand response market mechanisms are emerging with the aim of facilitating EV entry, but dynamic, cost-reflective price signals still appear a more realistic first step to encourage consumers and business fleets to commit their EVs. Finally, we highlight the risks to innovation and market growth caused by mandated, uncompensated system operator control approaches as proposed in the UK and seen in the USA. Summary Price signals are likely to remain the most important mechanisms to encourage EV engagement as storage and demand response resources in the near term. Policymakers, regulators, system operators, and suppliers should direct their attention to designing system cost-reflective, dynamic tariffs that maximise social welfare rather than individual EV revenues. Keywords Market design for electric vehicles . EV aggregators . Smart charging . Vehicle-to-grid . Electric vehicles demand response
Introduction The global electric vehicle market is progressing from innovators into an early adopters’ market, with around 8.7 million EVs on the road as of 2019 and 2.7% of new passenger car sales being electric. This figure is expected to increase to 58%
This article is part of the Topical Collection on Energy Markets * Claire Weiller [email protected] Amy Tianjiao Shang [email protected] Paige Mullen [email protected] 1
London, UK
2
Cambridge, UK
of car sales by 2040 [1]. Managing the resulting electricity demand is a challenge for capacity planning but is also considered as an opportunity to utilise EVs as distributed battery resources to help balance the grid and provide valuable services to grid operators and end users. The potential value of electric vehicles either as bi-directional storage assets (vehicle-to-grid technology) or as flexible
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