9. Integration of PEVs into Power Markets: A Bidding Strategy for a Fleet Aggregator

With a large-scale introduction of plug-in electric vehicles (PEVs), a new entity, the PEV fleet aggregator, is expected to be responsible for managing the charging of, and for purchasing electricity for, the vehicles. This book chapter deals with the problem of an aggregator bidding into the day-ahead electricity market with the objective of minimizing charging costs while satisfying the PEVs’ flexible demand. The aggregator is assumed to potentially influence market prices, in contrast to what is commonly found in the literature. Specifically, the bidding strategy of the aggregator is formulated as a bi-level problem, which is implemented as a mixed-integer linear program. The upper-level problem represents the charging cost minimization of the aggregator, whereas the lower-level problem represents the market clearing. An aggregated representation of the PEV end-use requirements as a virtual battery, with time varying power and energy constraints, is proposed. This aggregated representation is derived from individual driving patterns. Since the bids of other market participants are not known to the aggregator ex ante, a stochastic approach is proposed, using scenarios based on historical data to describe such uncertain bids. The output of the proposed approach is a set of bidding curves, one for each hour of the day. Results show that by using PEV demand flexibility, the aggregator significantly reduces the charging cost. Additionally, the aggregator’s bidding strategy has an important impact on market prices.