An energy brokerage system with emission trading and allocation of cost savings

An energy brokerage system can achieve lower emission levels for interconnected electric utilities in a cost-effective way. The paper presents a linear programming formulation of an energy brokerage system in an operational planning framework. Emission trading among utilities is envisaged to achieve emission reduction targets. The power and emission buy/sell quotes for individual utilities are computed and communicated to a central broker. The broker determines the power and emission interchange schedule which maximizes the power system savings for all participating utilities. The Shapley value criterion is proposed for allocation of cost savings among the utilities. This criterion reflects the true marginal contribution of a utility to the aggregate system savings and hence, is superior to the existing methods of cost savings allocation.