Fair division of costs in green energy markets

Jens Hougaard (), Dorte Kronborg and Aleksandrs Smilgins ()

Energy, 2017, vol. 139, issue C, 220-230

Abstract: This paper considers cost allocation in networks where agents are characterized by stochastic demand and supply of a non-storable good, e.g. green energy. The grid itself creates possibilities of exchanging energy between agents and we propose to allocate common costs in proportion to the economic gain of being part of the grid. Our model includes a set of fundamental requirements for the associated trading platform. In particular, it is argued that a suitable mechanism deviates from a traditional market. The approach is illustrated by simulations.

Keywords: Cost allocation; Networks; Gains; Electricity; Smart grids (search for similar items in EconPapers)
JEL-codes: C63 D47 D63 L94 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:139:y:2017:i:c:p:220-230

DOI: 10.1016/j.energy.2017.06.122

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