An application of the Aumann-Shapley approach to the calculation of inter TSO compensations in the UCTE system

Abstract

Calculating Inter TSO Compensations (ITC) has turned out to be a highly critical issue in facilitating the formation of a competitive Internal Electricity Market in Europe. Plenty of methods have been proposed to calculate ITCs, but few of them have the features that are required, namely fairness, transparency and reasonability of their results. This article presents the Aumann-Shapley approach to calculate the compensations for the use of networks by cross-border flows. Using the fundamentals of game theory, the Aumann-Shapley approach lets agents themselves choose the most appropiate generation-load counterpart and thus minimizes at the same time individual and global network usage. A numerical example involving a large fractione of the UCTE grid (17 countries) demonstrates the functioning of the proposed method and its suitability for its implementation in the European context.