It’s Electric! Optimizing Electric Vehicle Charging Through Tariffs

Abstract

The future of mobility lies with electric, and ultimately autonomous, vehicles. The shift from traditional Internal Combustion Engine Vehicles (ICEVs) to Electric Vehicles (EVs) is inevitable, but it is unclear precisely when this shift will occur. EVs have the potential to overtake the transportation world. However, the adoption rate is slowed by one main hurdle: the ability to charge the battery in an efficient and convenient manner. The widespread consumer reluctance to adopt EVs is largely attributable to ``range anxiety:'' potential customers are unsure if their batteries will last for long trips, and are often concerned about the ability to recharge where and when they need to. Currently, about 80% of charging is done at the home, but apartment-style living, crowded corporate locations and longer trips have exposed the weaknesses in the current infrastructure and underscored the necessity for an increase in the number of charging locations, improvements to the current electric grid, and updated policies. Uncontrolled home charging of EVs has significant impact on the local grid, emphasizing the need for improved electricity tariffs.

The goal of this thesis is to better understand the currently used electricity tariffs and evaluate different ratemaking designs for optimizing EV charging. The thesis begins by discussing the evolution of gas stations in the early 1900s alongside the growth of personal transportation. I will examine the historical patterns of mobility from the birth of the automobile to the recent focus on more environmentally friendly transportation options driven by a larger societal shift towards climate consciousness. Next, I will look at the current charging infrastructure and EV penetration. Then, I will analyze different tariff designs and the impact on the local power grid. Finally, I will analyze the economic aspects from the household's perspective and summarize my findings about ratemaking.