Stochastic Optimization of Grid to Vehicle Frequency Regulation Capacity Bids

This paper investigates the application of stochastic dynamic programming to the optimization of charging and frequency regulation capacity bids of an electric vehicle (EV) in a smart electric grid environment. We formulate a Markov decision problem to minimize an EV´s expected cost over a fixed charging horizon. We account for both Markov random prices and a Markov random regulation signal. We also propose an enhancement to the classical discrete stochastic dynamic programming method. This enhancement allows optimization over a continuous space of decision variables via linear programming at each state. Simple stochastic process models are built from real data and used to simulate the implementation of the proposed method. The proposed method is shown to outperform deterministic model predictive control in terms of average EV charging cost.