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Using Cooperative Game Theory to Analyse Allocations of Costs Related to Connecting Renewable Energy to the Power Grid

Malmberg, Filip LU and Jemdahl, Martin LU (2016) NEKH03 20161
Department of Economics
Abstract
Building new wind farms is an important part in the transition to renewable energy. However these projects often require large investments, and the cost of upgrading the existing infrastructure - to allow for the connection of new parks - is a component that cannot be ignored. When several wind farms seek interconnections, they are forced to collaborate and financing the connection. This leads to the question of how these costs should be shared between different agents. We investigate whether the currently used allocation method can and should be replaced with a fairer method, by formulating the problem as a cooperative game and using some well-established fairness axioms. Furthermore we apply our findings on the real case example Havsnäs... (More)
Building new wind farms is an important part in the transition to renewable energy. However these projects often require large investments, and the cost of upgrading the existing infrastructure - to allow for the connection of new parks - is a component that cannot be ignored. When several wind farms seek interconnections, they are forced to collaborate and financing the connection. This leads to the question of how these costs should be shared between different agents. We investigate whether the currently used allocation method can and should be replaced with a fairer method, by formulating the problem as a cooperative game and using some well-established fairness axioms. Furthermore we apply our findings on the real case example Havsnäs wind farm in Sweden, as well as some fictive examples. Our findings show that in most cases, the current method where costs are divided proportionally to the total effect that the wind farm produces, is best suited. However, in some particular examples a more intricate mathematical method of cost sharing would be preferred. (Less)
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author
Malmberg, Filip LU and Jemdahl, Martin LU
supervisor
organization
course
NEKH03 20161
year
type
M2 - Bachelor Degree
subject
keywords
Renewable energy, grid upgrade, grid extension, grid connection, wind farm projects, cost sharing game, cost allocations, cooperative game theory, shapley value, nucleolus, the core, transition to renewable energy
language
English
id
8891793
date added to LUP
2016-09-19 10:48:57
date last changed
2016-09-19 10:48:57
@misc{8891793,
  abstract     = {Building new wind farms is an important part in the transition to renewable energy. However these projects often require large investments, and the cost of upgrading the existing infrastructure - to allow for the connection of new parks - is a component that cannot be ignored. When several wind farms seek interconnections, they are forced to collaborate and financing the connection. This leads to the question of how these costs should be shared between different agents. We investigate whether the currently used allocation method can and should be replaced with a fairer method, by formulating the problem as a cooperative game and using some well-established fairness axioms. Furthermore we apply our findings on the real case example Havsnäs wind farm in Sweden, as well as some fictive examples. Our findings show that in most cases, the current method where costs are divided proportionally to the total effect that the wind farm produces, is best suited. However, in some particular examples a more intricate mathematical method of cost sharing would be preferred.},
  author       = {Malmberg, Filip and Jemdahl, Martin},
  keyword      = {Renewable energy,grid upgrade,grid extension,grid connection,wind farm projects,cost sharing game,cost allocations,cooperative game theory,shapley value,nucleolus,the core,transition to renewable energy},
  language     = {eng},
  note         = {Student Paper},
  title        = {Using Cooperative Game Theory to Analyse Allocations of Costs Related to Connecting Renewable Energy to the Power Grid},
  year         = {2016},
}