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Cost allocation in energy distribution networks

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  • David Lowing

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - EM - EMLyon Business School - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper presents a cost allocation problem arising from energy distribution and proposes cost allocation rules that depend on the distribution network and consumer demands. To determine relevant rules, we adopt a normative approach and compare two principles: (i) the connection principle and (ii) the uniformity principle. The Connection rule is proposed in accordance with (i), while the Uniform rule is developed in line with (ii). However, (i) and (ii) are incompatible. To make a trade-off between them, we propose a family of Mixed rules. Each rule is axiomatically characterized. Then, we demonstrate that the Connection rule coincides with the multi-choice Shapley value of a specific multi-choice game derived from the original problem. Moreover, the Connection rule is in the Core of this game. Similarly, we show that the Uniform rule and the Mixed rules coincide with other solution concepts from multi-choice games.

Suggested Citation

  • David Lowing, 2023. "Cost allocation in energy distribution networks," Working Papers hal-03680156, HAL.
    • Handle: RePEc:hal:wpaper:hal-03680156
    Note: View the original document on HAL open archive server: https://hal.science/hal-03680156v3
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    References listed on IDEAS

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    1. Michel Grabisch & Lijue Xie, 2007. "A new approach to the core and Weber set of multichoice games," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 66(3), pages 491-512, December.
    2. David Lowing & Kevin Techer, 2022. "Marginalism, egalitarianism and efficiency in multi-choice games," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(4), pages 815-861, November.
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    Keywords

    Energy distribution network; Cost allocation rules; Axiomatization; Multi-choice games;
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