An Incentive Scheme for Grid-Enhancing Technologies Based on the Shapley Value

Abstract

Modernization of the transmission system via deploying grid-enhancing technologies (GETs) is a cornerstone of future grid design. New congestion patterns necessitating renewable energy curtailment highlight the significance of GETs. Despite the wide acknowledgment of the importance and benefits of GETs, their deployment remains fairly limited. One important barrier is the lack of proper incentives for deployment and efficient operation of GETs. This paper designs an incentive scheme to compensate GETs based on their performance in the intraday market. The rewards are determined based on the cost savings achieved by GET operations and are allocated to market participants using the Shapley value. The proposed incentive scheme is tested with numerical studies on modified IEEE RTS 24-bus and IEEE 300-bus systems. Results confirm that the designed incentive is aligned with the system objective: GET owners are compensated when cost savings are achieved. The benefits of a performance-based payment scheme are threefold: (i) it promotes efficient operation of existing GETs based on the state of the system, (ii) it attracts further GETs deployment, and (iii) moves the risk from ratepayers to the investors.