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

Mozhdeh Hematiboroujeni, Pierre Le Bodic, Adel N. Toosi, Markus Wagner

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.

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

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.
Paper Structure (23 sections, 23 equations, 12 figures, 3 tables, 1 algorithm)

This paper contains 23 sections, 23 equations, 12 figures, 3 tables, 1 algorithm.

Table of Contents

  1. Introduction
  2. Related Work
  3. System Model
  4. Bilevel Optimization Problem
  5. Upper-Level Problem
  6. Lower-Level Problem
  7. Lower Problem Reformulation
  8. Experimental Design
  9. Simulation Setup
  10. Baseline Methods for Comparison
  11. Baseline 1: Adjusted Real-time Pricing
  12. Baseline 2: Fixed Flat Tariff
  13. Baseline 3: Hybrid Pricing
  14. Results
  15. Overall Performance
  16. ...and 8 more sections

Figures (12)

  • Figure 1: Overview of the proposed menu-based pricing framework
  • Figure 2: Price profile of AEMO for Monday of each month.
  • Figure 3: Price profile for trading energy with grid; first Monday of April 2025.
  • Figure 4: Charging and discharging price profiles offered to EV users under the three baseline schemes.
  • Figure 5: Overall performance of our menu-based mechanism versus three baselines.
  • ...and 7 more figures