Application of the Shapley Value on transmission cost allocation in the competitive power market environment

The Shapley value of cooperative game theory is proposed to allocate the transmission cost incurred to accommodate all the loads. This method overcomes the drawbacks of conventionally used methods, such as postage-stamp method and MW-miles method, and encouraging the economically optimal usage of the transmission facilities. The simulation results showed that the allocation solution met the requirements of an appropriate pricing strategy and generated the allocation solution that impartial observers would consider fair and desirable.