New Electric Vehicle Charging Business Model Poses Multiple Benefits for Consumers, Utilities and the Environment

Research Shows Offering Drivers Cheaper Prices to Charge Later is Multibeneficial

New Manufacturing & Service Operations Management Study Key Takeaways:

• Allowing drivers to choose from a menu of prices and charging completion times is cheaper for drivers and electric utility companies, and cleaner for the environment.
• New electric vehicle charging model can reduce charging cost at public charging stations by 20% and associated emissions by 15% during a summer month.
• Most of the savings from implementing smart charging can be achieved during peak-demand days. 

BALTIMORE, MD, February 10, 2022 – As the popularity and ubiquity of electric vehicles (EV) rapidly increases, so too is the burden of EV charging on electric utility companies. New research in the INFORMS journal Manufacturing & Service Operations Management finds that utilizing new business models that promote “smart charging” options can alter the cost curve for consumers and utility providers alike, creating a win-win situation that strengthens the mass market viability for the entire electric vehicle ecosystem.

“Electric vehicles don’t have to impose a burden on the grid if we charge them at the right time. Providing drivers with a menu of options for charging completion times and prices allows drivers to delay charging and in turn get a cheaper rate,” says Owen Wu of Indiana University. “Based on data from the largest electricity market in the U.S., we show that our method can reduce charging costs by 20% and associated emissions by 15% during a summer month.”

The study, “Smart Charging of Electric Vehicles: An Innovative Business Model for Utility Firms,” authored by Wu, Şafak Yücel of Georgetown University and Yangfang (Helen) Zhou of Singapore Management University, found that most of the economic and environmental benefits from smart charging can be achieved in a few days when the overall electricity demand is high.

“The current practice of charging electric vehicles at public charging stations is to charge them as soon as possible, but the cost, felt by the utility companies, can vary significantly over the course of a day, so delay charging can reduce cost and emissions,” continues Wu, a professor in the Kelley School of Business at Indiana University. “Since the charging station does not know which drivers can delay charging, our method lets drivers choose. If they delay charging, they receive a price discount.”

Utility companies are in an ideal position to provide this new model of EV charging service. They can use this smart charging approach to price the service to encourage drivers to avoid charging during the peak time.

“It’s cheaper for consumers, for the grid, and cleaner for the environment,” concludes Wu.

Link to full study.

About INFORMS and Manufacturing & Service Operations Management

INFORMS is the leading international association for operations research and analytics professionals. Manufacturing & Service Operations Management, one of 17 journals published by INFORMS, is a premier academic journal that covers the production and operations management of goods and services including technology management, productivity and quality management, product development, cross-functional coordination and practice-based research. More information is available at www.informs.org or @informs.

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