An incentive-based mechanism for transmission asset investment

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

doi:10.1016/j.dss.2008.12.005

An incentive-based mechanism for transmission asset investment

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

Electrical and Computer Engineering

Research output: Contribution to journal › Article › peer-review

Abstract

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 language	English (US)
Pages (from-to)	22-31
Number of pages	10
Journal	Decision Support Systems
Volume	47
Issue number	1
DOIs	https://doi.org/10.1016/j.dss.2008.12.005
State	Published - Apr 2009

Keywords

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

Online availability

10.1016/j.dss.2008.12.005

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Cite this

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title = "An incentive-based mechanism for transmission asset investment",

abstract = "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.",

keywords = "Cooperative game theory, Investment incentives, Shapley value, Social welfare, Transmission planning",

author = "Javier Contreras and George Gross and Arroyo, {Jos{\'e} Manuel} and Mu{\~n}oz, {Jos{\'e} Ignacio}",

note = "Funding Information: This work was supported in part by the Ministry of Education and Science of Spain through a grant of the Program of Stays of University Professors and Researchers in foreign centers of higher education and research and by PSERC. ",

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AU - Contreras, Javier

AU - Gross, George

AU - Arroyo, José Manuel

AU - Muñoz, José Ignacio

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PY - 2009/4

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N2 - 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.

AB - 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.

KW - Cooperative game theory

KW - Investment incentives

KW - Shapley value

KW - Social welfare

KW - Transmission planning

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An incentive-based mechanism for transmission asset investment

Abstract

Keywords

ASJC Scopus subject areas

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