A Tracing Method for Pricing Inter-Area Electricity Trades
In the context of liberalisation of electricity markets world wide, the need for agreed protocols for electricity trades between systems with different charges poses a special challenge. System operators need to know how much a given trade uses the network, in order to allocate an appropriate portion of their costs to that trade. This paper discusses a technique, tracing, for determining how much each of a number of trades uses different parts of the electricity network. The scheme is based on the assumption that at any network node, inflows are shared proportionally between outflows (and vice versa). The paper outlines the technique and shows how it could be applied to the problem of charging cross-border trades. The paper goes on to demonstrate that the technique has a game theoretic rationale, in that it produces the Shapley value solution to a game equivalent to this allocation problem.
|Date of creation:||Jun 2001|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.econ.cam.ac.uk/index.htm|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin Shubik, 1962.
"Incentives, Decentralized Control, the Assignment of Joint Costs and Internal Pricing,"
INFORMS, vol. 8(3), pages 325-343, April.
- Martin Shubik, 1961. "Incentives, Decentralized Control, the Assignment of Joint Costs and Internal Pricing," Cowles Foundation Discussion Papers 112, Cowles Foundation for Research in Economics, Yale University.
- Aadland, David & Kolpin, Van, 1998. "Shared irrigation costs: An empirical and axiomatic analysis," Mathematical Social Sciences, Elsevier, vol. 35(2), pages 203-218, March.
- S. C. Littlechild & G. Owen, 1973. "A Simple Expression for the Shapley Value in a Special Case," Management Science, INFORMS, vol. 20(3), pages 370-372, November.
- Green, R., 2004.
"Electricity Transmission Pricing: How much does it cost to get it wrong?,"
Cambridge Working Papers in Economics
0466, Faculty of Economics, University of Cambridge.
- Richard Green, 2004. "Electricity Transmission Pricing: How much does it cost to get it wrong?," Working Papers 0420, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Castano-Pardo, Alberto & Garcia-Diaz, Alberto, 1995. "Highway cost allocation: An application of the theory of nonatomic games," Transportation Research Part A: Policy and Practice, Elsevier, vol. 29(3), pages 187-203, May.
When requesting a correction, please mention this item's handle: RePEc:cam:camdae:0107. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jake Dyer)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.