Coordination of multilateral trades in electricity markets via power vectors

Abstract

A transmission restructure model is presented, which resolves line abuse, conflict of incentives and information asymmetry in electricity markets. It uses market compatible game theory, graph theory, market mechanism, multilateral trade structure, etc. rather than conventional tools. The model is useful to emulate any active, competitive transmission sector. It has more relevance in countries like India with high T&D loss and power deficit problems. Cooperative game theory (CGT) is holistically applied in organizational, operational, commercial and planning aspects of restructure. A three phase CGT environment to model entity interactions, an elastic transmission service charge (TSC) to penalize abuse and a powerful power vector to resolve information asymmetry are some proposals developed in this context. In the scheme, Discos use power vectors to play the game and negotiate for agreeable TSC share and engineer fruitful mergers. A stable set of coalitions contracting optimal trades at lowest TSC is finally obtained. The method is illustrated on a 5 bus and successfully tested on a 24 bus Indian power system. The outcome is that agents aggregate sequentially, to safeguard network security as a common agenda, despite market activities starting at diverse locations. These results are important because transmission is the most difficult zone to model in electricity markets due to several issues and this model addresses most of them. Copyright © 2011 John Wiley & Sons, Ltd.