Transmission embedded cost allocation using proportional nucleolus based game theoretic approach in a restructured power market

In deregulated electricity markets there is a strong need for effective allocation of transmission embedded costs to market participants. The conventional usage based methods such as MW-Mile and ZCF methods which are currently employed in market scenario may fail to send right economic signals. Hence in this paper, cooperative game theory based approaches are demonstrated. The existing game theory based approaches like Nucleolus and Shapley Value methods are found to be inefficient for transmission embedded cost allocation, due to their own pros and cons. Therefore Proportional Nucleolus (P-N) method which is also a cooperative game theory approach is proposed in this paper to overcome the drawbacks of aforementioned methods. All the methods presented in this paper are tested on IEEE 14 bus system, and a comparative study was carried out with the obtained results.