P.V. Satyaramesh∗ and C. Radhakrishna∗∗
Bilateral-transaction model, cooperative game theory, loss allocation, Shapley, core, proportional nucleolus
This paper presents a cooperative game theory application (CGT) for analysing the allocation of the transactional transmission losses in bilateral electricity markets. This paper identifies a set of approaches documented in literature in the areas of application of CGT and reviews their applicability to allocations of losses in bilateral electricity markets. The allocation methods can be broadly classified into three categories, i.e., classical, new, and variants of nucleolus. In this paper, two points are focused during the study: the structure of the game and the concept of fairness behind it. The allocation concept of these methods is systematically analysed and compared, and calculations have been performed on the sample six- bus example and the standard IEEE 14-Bus System. The variants of nucleolus are shown to be among the most plausible concepts. A power flow procedure is applied to calculate the power losses for each transaction.
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