An incentive-based mechanism for transmission asset investment

Javier Contreras, George Gross, José Manuel Arroyo, José Ignacio Muñoz

Research output: Contribution to journalArticlepeer-review


This paper presents an incentive scheme to encourage investment in the improvement and expansion of the transmission in the competitive electricity market environment. To create these incentives, a decentralized transmission asset investment model is proposed, where the new assets are built by the investors. The incentives are based on the value added to the social welfare through each asset investment. By viewing each potential investor as a player in a cooperative game the Shapley value is used to reward investors according to the added value that they create. The proposed methodology is applied to the Garver 6-bus system and the IEEE 24-bus Reliability Test System to illustrate the capability and flexibility of the decision support system presented.

Original languageEnglish (US)
Pages (from-to)22-31
Number of pages10
JournalDecision Support Systems
Issue number1
StatePublished - Apr 2009


  • Cooperative game theory
  • Investment incentives
  • Shapley value
  • Social welfare
  • Transmission planning

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems
  • Developmental and Educational Psychology
  • Arts and Humanities (miscellaneous)
  • Information Systems and Management


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