Reference transmission network: a game theory approach

Abstract

Abstract-The transmission network plays a key role in an oligopolistic electricity market. In fact, the capacity of a transmission network determines the degree to which the generators in different locations compete with others and could also greatly influence the strategic behaviors of market participants. In such an oligopolistic framework, different agents may have distinct and sometimes opposite interests in urging or hindering certain transmission expansions. Therefore, the regulatory authority, starting from the existing grid, faces the challenge of defining an optimal network upgrade to be used as benchmark for approval or rejection of a given transmission expansion.The aim of this paper is to define the concept of reference transmission network (RTN) from an economic point of view and to provide a tool for the RTN assessment in a deregulated framework where strategic behaviors are likely to appear. A general gametheoretic model for the RTN evaluation is presented, and the solution procedure is discussed. The strategic behavior of market agents in the spot market is modeled according to a Supply Function Equilibrium approach. The impact of transmission capacity expansion on market participants' strategic behavior is studied on a three-bus test network. The RTN is computed and compared with the optimal expansion found when perfect competition among power producers is assumed.

Game Theory Application in Smart Energy Logistics and Economy

“…There is a key assumption in game theory that all the players behave rationally. Therefore, each player earns the profit from the game [10].…”

“…In this game, different generators and demands are represented as players. Therefore, different transmission access problems such as transmission usage and usage cost allocation, transmission loss, and loss cost allocation can be optimized with the help of cooperative game theory because all the participants utilized the common network [10].…”

A new market clearing mechanism, based on comprehensive welfare allocation, considering participants' optimality, efficiency, and extent of transmission use

“…That is the network with minimum amount of total operational costs and transmission investment costs (or long‐run social welfare). Moreover, defines the optimal transmission expansion plan as RTN. Nevertheless, they all neither evaluate the current network optimality by using the resulted RTN nor determine the rational transmission revenue, on the basis of this benchmark.…”

Transmission expansion investment: Cooperative or non-cooperative game?

“…It determines the costs and benefits of the agents in function of their strategies. The major applications have centered in cooperative or coalition games, and in a lesser degree, on non-cooperative or strategic games [5][6][7]. The most used methods have been the Shapley value or the bilateral Shapley value -BVS- [8][9][10][11][12][13], Kernel [14,15] and nucleolus [16][17][18].…”