Game theory revolutionizes fair transmission cost allocation in deregulated environments.
The cooperative game theory is used to allocate transmission fixed costs fairly in a deregulated environment. This method is better than traditional methods like postage stamp and MW miles, promoting optimal use of transmission facilities. The goal is to allocate costs to both loads and generators in a way that provides fair signals for optimal operation. By using game theory models based on the Shapley value, the researchers found that their approach is easier to implement and more effective than conventional methods.