Insurance contract for electric vehicle charging stations: A Stackelberg game-theoretic approach

Abstract

The development of electric vehicles has led to an expansion of Electric Vehicle Charging Stations (EVCSs). However, this expansion also brings about significant amount of risks, resulting in financial loss for EVCSs. To address this issue, this paper proposes an optimal insurance model based on a Stackelberg game between an insurer and a risk-averse EVCS operator. In the game, the insurer sets the insurance premium, and the EVCS operator decides on her charging price and ceded loss function. The paper explores the existence of the optimal solution of the game under the assumption of n-point distributed loss, and also characterizes the optimal solution if the loss follows two-point distribution. Finally, numerical examples are provided to demonstrate the effects of parameters on the optimal solution.