Two-Stage Mechanism Design for Electric Vehicle Charging with Day-Ahead Reservations

2025-08-29

AI Summary

This paper addresses the charging scheduling problem for electric vehicles (EVs) participating in both day-ahead and real-time electricity markets, proposing the first reservation-aware two-stage mechanism design. Methodologically, it integrates the Vickrey–Clarke–Groves (VCG) auction with a dynamic pricing scheme, resolving the inherent trade-off between budget balance and reservation awareness in conventional VCG mechanisms through incentive-compatible analysis and game-theoretic modeling. The key contributions are: (i) the first formal incorporation of reservation awareness into dual-market mechanism design; (ii) the construction of a hybrid pricing framework satisfying four normative properties—incentive compatibility, social efficiency, budget balance, and reservation awareness; and (iii) theoretical proof that the mechanism achieves near-optimal scheduling efficiency when users’ valuations exhibit high correlation. This work establishes a practical, implementable market design paradigm for flexible resource allocation in vehicle-to-grid (V2G) systems.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Planning, Routing, and Scheduling: Scheduling under Uncertainty

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• User Modeling, Personalization and Recommendation: User privacy protection in personalized systems
• Security and Privacy: Large-scale security measurements

Abstract

We propose a general two-period model where electrical vehicles (EVs) can reserve charging sessions in the day-ahead market and swap them in the real-time market. Under the model, we explore several candidate mechanisms for running the two markets, compared using several normative properties such as incentive compatibility, efficiency, reservation awareness, and budget balance. Specifically, reservation awareness is the only property coupling the two markets and dictates that an EV will not get a lower utility by joining the real-time market. Focusing on the real-time market, we show that two variants of the classical Vickrey-Clarke-Groves (VCG) mechanism do not satisfy all the proposed properties; specifically, one is not reservation-aware, while the other is not budget-balanced. Moreover, we show that no mechanism satisfies some combinations of the properties. Then, we propose to use a posted-price mechanism to resolve the issue, which turns out to be the dynamic pricing mechanism adopted in many real-world systems. The proposed mechanism has no efficiency guarantee but satisfies all the other properties. To improve efficiency, we propose to use a VCG auction in the day-ahead market that guides the reserve prices in the real-time market. When EVs' valuations in the two markets are highly correlated, the proposed approach results in highly efficient outcomes.

Problem

• Designing a two-stage EV charging market with day-ahead reservations and real-time swaps
• Evaluating mechanisms for incentive compatibility, efficiency, and budget balance properties
• Proposing a posted-price mechanism to resolve property conflicts in real-time markets

Innovation

• Two-stage EV charging market design
• VCG mechanism variants with limitations
• Posted-price mechanism for real-time market