Smart Charging of Electric Vehicles: An Innovative Business Model for Utility Firms

This study proposes a price mechanism to incentivise electric vehicle drivers to delay charging, which reduces electricity generation cost and associated greenhouse gas emissions.


By providing an environmentally friendly alternative to traditional vehicles, electric vehicles will transform urban mobility, particularly in smart cities. In practice, after an electric vehicle is plugged in, the driver charges it as soon as possible, because currently the prices of electric vehicle charging are based on either kWh charged or charging duration. Given that the procurement cost of electricity and associated emissions vary significantly during the day, substantial savings can be achieved by smart charging or delaying charging when the cost is lower.


This study examines smart charging as an innovative business model for utility firms, which are already investing in charging stations. The utility firms face a mechanism design problem of designing a price menu for customers to choose from to incentivise those who can delay to choose a longer charging duration. In particular, the price menu specifies a certain price for a given duration to charge the vehicle. For instance, the price for charging is eight dollars if a driver needs the vehicle in three hours, and drops to six dollars in four hours, and further drops to five dollars in five hours. The longer the charging duration, the more flexibility the utility firm has in terms of managing the charging. Therefore, the utility firm can potentially reduce the total charging cost and pass the cost savings to these drivers who can delay charging their vehicles.

To solve this mechanism design problem, the utility firm has to first solve the problem of scheduling the charging of many electric vehicles once the charging time have been selected. This study devises an intuitive and practically implementable policy for scheduling charging of electric vehicles under given completion times. In contrast to the current practice of charging vehicles without delay, the study shows that the proposed smart charging reduces the total charging cost as well as greenhouse gas emissions.


This is a triple-win: a win for electric vehicle drivers as it lows their charging costs, a win for the grid as it lows the total electricity generation cost, and a win for the environment as it reduces emissions.

Lead Researcher: Assoc Prof Yangfang (Helen) Zhou (SMU Lee Kong Chian School of Business)

Read more about the study in this Press Release , or access the full study here .

This study was featured at SMU’s booth at the World Cities Summit 2022 exhibition.