Dynamic Menu-Based Pricing for Electric Vehicle Charging with Vehicle-to-Grid Integration

TL;DR

This paper introduces a dynamic menu-based pricing mechanism for EV charging with vehicle-to-grid integration, significantly improving operator profits and V2G contributions while reducing EV payments, compared to traditional tariffs.

Contribution

It presents a novel bilevel optimization-based pricing framework that effectively incentivizes V2G participation and enhances economic benefits for operators and EV users.

Findings

Operator profit increases by up to 30%.

V2G contribution increases by up to 235%.

EV payments decrease by up to 18%.

Abstract

The number of electric vehicles is rapidly increasing worldwide. This growth brings significant environmental benefits but also introduces new challenges: uncoordinated charging can place stress on the grid, particularly during peak hours. Beyond these challenges lies the opportunity for electric vehicles to feed energy back to the grid (V2G), which helps balance supply and demand and supports renewable energy. However, current pricing schemes such as time-of-use tariffs provide little incentive for discharging. To study incentive design in a realistic context, we focus on a parking lot operator who manages multiple EV chargers. We propose a menu-based pricing mechanism in which each EV declares its energy requirement and parking duration; given the retail real-time electricity prices, the operator offers a menu of options that trade off the allowed level of discharging and the associated price. We formulate this interaction as a bilevel optimization problem and reformulate it into a single-level model. Results show that, relative to a no-V2G baseline, the proposed mechanism increases operator profit by 30% and reduces EV payments by 17%. Compared to widely used tariff baselines, it improves operator profit by 22-29 percent, lowers EV payments by 9-18 percent, and increases V2G contribution by 87-235 percent. Overall, the results show that the proposed dynamic menu-based pricing framework provides a practical, computationally efficient, and economically advantageous approach for real-time EV charging and V2G integration.