Cost Savings of Smart Unidirectional and Bidirectional EVs Under Imperfect Foresight of Electricity Prices

Smart unidirectional and bidirectional charging of electric vehicles (EVs) has raised great attention in recent years, enabling access to enormous flexibility potential for the energy system. One use case often discussed is the utilization of this flexibility for arbitrage trading. Price forecasts play an important role in performing flexibility trading, yet many cost savings analyses assume perfect foresight and do not account for the necessity of forecasting electricity prices. In this paper, we have developed a methodology to determine the impact of price forecasts on the cost savings of smart charging of EVs. Thus, we are able to evaluate to what extent the assumption of perfect foresight simplifies estimations of the cost savings of arbitrage trading on different markets for residential EVs, as well as to evaluate different forecasts for their suitability for arbitrage trading. We find a comparatively low impact of the perfect foresight assumption on the cost savings in day ahead (DA) market trading. In contrast, trading in the intraday auction (IA) is subject to a higher risk. The highest difference between cost savings using perfect foresight and forecast prices occurs for combined trading on the DA and IA market. We see a higher impact of imperfect foresight for bidirectional charging than for smart unidirectional charging. Additionally, the forecasts most suited to maximizing cost savings are not necessarily those that show the lowest deviations between forecast and real prices in terms of mean absolute error (MAE) or root mean square error (RMSE), but those forecasts, which best predict the price extrema (daily minima and maxima). JEL Classification : P18, Energy; Environment; D89, Information and Uncertainty: Other