Shapley value analysis of distribution network cost-causality pricing

Donald Azuatalam, Archie C. Chapman, Gregor Verbic

Research output: Chapter in Book/Report/Conference proceedingConference PaperResearchpeer-review

Abstract

Distribution network capacity and services are ideally priced according to the cost-causality principle, where customers are charged according to the extent to which they are responsible for additional network capacity. As such, optimal network pricing should be forward-looking, reflecting the long-run marginal cost of providing network services. Since network investment costs are driven by peak demand, it is imperative that tariffs are demand-based and are able to provide efficient price signals to customers. In this paper, we evaluate customer's contribution to the collective peak demand of a capacity distribution network and then calculate their fair cost share using Shapley value analysis. In light of the computational requirements of these calculations, we use a sample-based approach to approximate the Shapley value with reasonable accuracy. We then employ customer yearly load profiles in the Solar Home Electricity Data to test the efficacy of our methodology.

Original languageEnglish
Title of host publication2019 IEEE Milan PowerTech
EditorsFederica Foiadelli
Place of PublicationPiscataway NJ USA
PublisherIEEE, Institute of Electrical and Electronics Engineers
Number of pages6
ISBN (Electronic)9781538647226
ISBN (Print)9781538647233
DOIs
Publication statusPublished - 2019
Externally publishedYes
EventIEEE Milan PowerTech 2019: Leading Innovation for Energy Transition - Politecnico di Milano (Bovisa Campus), Milan, Italy
Duration: 23 Jun 201927 Jun 2019
Conference number: 13th
https://attend.ieee.org/powertech-2019/

Conference

ConferenceIEEE Milan PowerTech 2019
Abbreviated titlePowerTech 2019
CountryItaly
CityMilan
Period23/06/1927/06/19
Internet address

Keywords

  • Cooperative game theory
  • Cost-causality
  • Demand-based tariffs
  • Network tariffs
  • Optimal network pricing
  • Randomised sampling
  • Shapley value

Cite this

Azuatalam, D., Chapman, A. C., & Verbic, G. (2019). Shapley value analysis of distribution network cost-causality pricing. In F. Foiadelli (Ed.), 2019 IEEE Milan PowerTech [8810968] IEEE, Institute of Electrical and Electronics Engineers. https://doi.org/10.1109/PTC.2019.8810968