A Game-Theoretic Approach for Cost Allocation in Joint Ventures in Electrical Power Generation Systems

A game-theoretic approach involving the Aumann- Shapley (AS) prices is used for cost allocation in joint ventures in electrical power generation systems. Three basic cases are considered: the case of "similar" load duration curves (LDC's) for the participating utilities and economies of scale in the capital cost for the jointly-owned unit; the case of "unsimilar" LDC's, same peak hour and no economies of scale; and the case of "unsimilar" LDC's, same peak hour with economies of scale. In the first case, the benefits of cooperation result from economies of scale, in the second from savings in the fuel costs and in the third from both. In all cases, the theoretical development is followed by a detailed numerical example to demonstrate the calculation process of the AS prices and the benefits of cooperation.