Fair allocation of transmission ancillary service cost using game theory: A preliminary study

In the present open access restructured power system market, it is necessary to develop an appropriate pricing scheme of the ancillary services offered by the market that can provide the useful economic information to market participants. The objective of this paper is to offer an easy and simple usage based cost allocation scheme for fair and equitable access fees for the recovery of fixed and variable costs among the market participants. The solution mechanisms of cooperative game theory behave well in terms of fairness, efficiency, and stability, qualities required for the correct allocation of transmission costs. The proposed method is illustrated in a practical system with different feeders drawing power from a substation transformer. The benefit of capacitive VAr injection has also been allocated to the system participants using the same methodology.