Lauinger, DirkVuille, FrançoisKuhn, Daniel2020-05-152020-05-152020-05-15202410.1287/msom.2022.0154https://infoscience.epfl.ch/handle/20.500.14299/168763arXiv:2005.06042v1Problem definition: Vehicle-to-grid increases the low utilization rate of privately owned electric vehicles by making their batteries available to electricity grids. We formulate a robust optimization problem that maximizes a vehicle owner’s expected profit from selling primary frequency regulation to the grid and guarantees that market commitments are met at all times for all frequency deviation trajectories in a functional uncertainty set that encodes applicable legislation. Faithfully modeling the energy conversion losses during battery charging and discharging renders this optimization problem nonconvex. Methodology/results: By exploiting a total unimodularity property of the uncertainty set and an exact linear decision rule reformulation, we prove that this nonconvex robust optimization problem with functional uncertainties is equivalent to a tractable linear program. Through extensive numerical experiments using real-world data, we quantify the economic value of vehicle-to-grid and elucidate the financial incentives of vehicle owners, aggregators, equipment manufacturers, and regulators. Managerial implications: We find that the prevailing penalties for nondelivery of promised regulation power are too low to incentivize vehicle owners to honor the delivery guarantees given to grid operators.Vehicle-to-gridFrequency regulationEnergy storageEnergy economicsRobust optimizationContinuous-time linear programmingtext::journal::journal article::research article