Optimization Models for Power Grid Expansion Cost Allocation Based on Cooperative Game Theory

In this paper, the cost allocation methods for power grid investment are discussed in two conditions according to the benefit of each participant after the gird expansion. In the case that each player gets a net profit, Core and Nucleolus value concepts in Cooperative game theory are applied to allocate the expansion cost among them. In the other case that some players appose the power grid expansion for their profit decreasing, based on cooperative game theory, a scheme is designed to make all market participants support the expansion. The Shapley value formula is chosen to calculate the payments made by each participant which are based on the increase in social welfare brought about by the expansion, the pre-surpluses of the players, and the influence the different market participants may have on the expansion decision.