Are current demand response baseline designs suitable for electric vehicles? Policy insights from the independent aggregation business model

Demand response baselines are pivotal for accurately quantifying market-based flexibility provided by electric loads. Although they have been successfully applied to a variety of curtailable loads, their effectiveness for plug-in electric vehicles remains under question. This paper assesses the performance of current baseline designs for flexible electric vehicle fleets by examining the business case of an independent electric vehicle aggregator that participates in the electricity balancing market. A comprehensive market participation framework is developed to evaluate whether independent electric vehicle aggregators can strategically manipulate common baseline designs to maximize revenues through leveraged flexibility. Four different baseline designs are evaluated using year-long simulations at 15-min intervals, employing two real-world electric vehicle fleet datasets and actual data from two European wholesale electricity markets. The results shed light on the aggregator's revenues and flexibility provision, revealing that in two of the four baseline designs, the aggregator can manipulate baselines to significantly increase revenues by providing excessively high flexibility volumes, thereby calling the fairness of these designs into question. Our findings are valuable for policymakers and regulators, whose timely interventions are critical to prevent unfair competition among flexibility providers and ensure the long-term viability of the demand response market.