Aumann Shapley Method for Congestion Cost Allocation in Multilateral Transactions Framework of Restructured Power Market

Abstract

Deregulation of Electricity market has not only led to increase in competition among generators, but also reduced electricity prices. It has introduced several issues in the market; two of them are congestion management and market power. Due to open transmission access all the participants have equal right to access transmission network. However, they have to bear the costs incurred to accommodate their transaction. The cost allocation is still a problem to be tackled efficiently. The prevailing problem is how to allocate the congestion cost among the market participants. An efficient and fair allocation of congestion cost would result in smooth operation of transmission system. It also helps in tackling congestion and market power. This paper proposes a novel approach using Aumann Shapley (AS) method of game theory for congestion cost allocation in a deregulated electricity market. The results obtained using proposed method are compared with uplift and nodal pricing methods for IEEE 14 bus system, New England 39 bus system and 75 bus Indian power system (practical data). This comparison illustrates the pros and cons of each method.