Cooperative game theory for a reliable and economic transmission sector in electricity markets

Cooperative game theory is relevant for ensuring reliability of power grid of electricity markets, where central objectives of its transmission sector clash with the private incentive of its players. It is a critical component of market engineering as also is differential pricing, which is used here for pricing of transmission. Another tool used in the model for transmission sector, is a power vector to identify coalition partners. This procedural model is explained in three phases of game theory and is illustrated using a 24 bus power system. The results are significant and show that loss, congestion and total power flow in lines decrease considerably, improving efficiency.