A Game Theory Based Approach to Investigate Cross-Subsidy in Loss Allocation in Power Distribution Network

Abstract

The losses occurring in a power distribution network are recovered from the users. For this, a loss allocation technique is employed to decide the contributions from the users in total losses. Apart from being fair and transparent, the loss allocation should also be free from cross-subsidy, i.e., any user should not be subsidized over others. It necessitates a mechanism to identify and quantify cross-subsidy in the results of loss allocation. This paper, therefore, investigates the cross-subsidy by modeling the problem of loss allocation in distribution network as a cooperative game. The separate coalition of loads or distributed generators is modeled as a surplus allocation game, while the coalition of loads and distributed generators is modeled as a cost allocation game. In these games, a subsidy-free allocation lies within the core, and the deviation from the core is utilized to determine the level of cross-subsidization. Using the proposed technique, cross-subsidy is quantified in the results of various loss allocation methods. The results are tested on two different test systems, and the findings are analyzed and discussed in this paper.