This recent post on MIT's Tech Review provides an interesting technology solution and information asymmetry problem in the same article.
The basic problem is that most electric vehicles will require overnight charging so that they are ready when the owners need their cars for the morning commute. Any given grid will have a certain amount of excess capacity which it can devote to this problem. But if the number of cars is large, it cannot charge them all.
So the idea that Yingjie and co explore is to find a fair way to charge as many as possible with minimum disruption.
Their system is fairly efficient. The math is pretty intense in the actual paper, but the takeaway from their algorithm is this:
“The proposed scheme needs only 5 per cent more than the power demanded to ensure all the vehicles departing with delay in a few minutes,” say Yingjie and co.
But as always, incentives matter.
But there is a potential problem. It’s not entirely clear that users would be honest about their requirements, perhaps saying they will leave earlier than planned and that they have a longer commute, to ensure a full charge. In fact, it’s hard to imagine that people would not attempt to game such a system.
And therein lies a fundamental problem for humanity– how to distribute a limited resource fairly.
This is where economists can assist. First, although this is not addressed in the article, I think that worries about such a system exacerbating our electricity usage and therefore pollution are warranted…without a carbon tax or cap and trade system. Instituting a price on carbon would mitigate the potential for carbon-intensive energy production beyond the optimal quantity. See here, here and here for details on the why and how.
Second, I think that the problem of information asymmetry here is an interesting one with a few potential solutions. Any solution for this problem assumes that we want to allow power companies or some benevolent regulator to know what time we need our car in the morning. I'll assume that this is part of the agreement we sign when we agree to do business with our electricity provider. In order to provide incentive for users to provide accurate information, economists typically decide to subsidize those who provide accurate information or tax those who are dishonest.
The potential problem with this is that we cannot always predict exactly what time we're going to leave in the morning. If the baby gets sick in the night and we have to leave early for a doctor's appointment or the alarm doesn't go off and we leave late to work, we end up having to pay a penalty that may seem unfair. My first thought is that instituting a tax system for inaccurate predictions with a certain number of passes for each customer to allow for emergencies or "bad days" might work. The tax curve would have to fit with the additional cost spinning up the additional power sources for increased capacity.
An implicit tax might work better (from a behavioral point of view) by providing a "decreased rate" for those who are consistently accurate in their predictions. Both of these policies could be used in conjuction with the findings of California's behavioral electricity billing tests for an overall more efficient grid. Thoughts?
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