Study on hydropower pricing model based on pareto improvement criterion

Based on the Pareto improvement criterion, this paper proposes a model of hydropower pricing using Shapley value approach. The penalty factor and reward factor of hydropower price are introduced in the model to achieve a discriminating hydropower pricing by providing effective economic signals. In this model the object to minimize the ratio of the economic reduction of hydropower and the reduction of line loss is also involved. Further, a case study is presented to analyze and illustrate the implications and characteristics of the proposed model. It is showed that the new hydropower pricing model can achieve a win-win result for operational efficiency of the power grid and economic efficiency of the small hydropower plants.