A novel nucleolus-based loss allocation method in bilateral electricity markets

The situation of current research on power losses allocation in bilateral electricity markets is presented. Based on cooperative game theory, a novel nucleolus theory-based method for power losses allocation under the bilateral-transactions model is put forward and compared in detail with the Shapley-value-based allocation method. The impacts of different market players on network power losses are taken into account. With the new method, network power losses can be allocated to each transaction reasonably. The allocation results would not be affected by the sequence that each transaction is formed and be active. The method answers for the open, equal, and impartial principles of electricity market and can be easily understood and accepted by market players. Numerical tests validated the equity and validity of the method.