Congestion cost allocation using game theory in multilateral framework

Abstract

Deregulation of Electricity market has led to increase in competition among generators and hence reduced prices. It has introduced several issues in the market like congestion management, market power. Due to open access all the participants have equal right to access transmission system. 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 Aumann Shapley method of game theory for congestion cost allocation. This method is compared with uplift and nodal pricing methods for IEEE 14 bus, New England 39 bus and 75 bus Indian power systems. This comparison illustrates the pros and cons of each method.