Transmission Embedded Cost Allocation in Restructured Environment: A Game-theoretic Approach

The complex problem of network cost allocation prompts the development of stable network usage evaluation models that can handle the new market situations involving multiple players. Under the restructured environment, the embedded cost needs to be allocated to the loads as well as generators so as to provide a locational signal to both types of customers for optimal location. This article proposes game-theoretic models based on the Nucleolus and Shapley value approaches for cost allocation problems under the restructured environment. The obtained results are compared with those from the usually adopted methodologies to assert easy implementation of the proposed methodologies.