Cooperative game theory improves real-time local energy market settlements
A Cooperative Game-Theoretic Framework for Real-Time Deviation Settlement in Local Energy Communities
Computer Science and Game Theory
Summary
When groups of homes share energy in local markets, it's tricky to fairly split the costs and benefits when energy use changes unexpectedly. The authors created a way to divide these financial ups and downs using game theory, which looks at how groups cooperate. They compared three methods and found that one called the nucleolus keeps all groups happy all the time. They tested their approach with real data from a neighborhood in Amsterdam to see how it works in practice.
What this means in practice
- •For energy market operators: Settle real-time energy deviations fairly among local community participants to improve market stability.
- •For utility company planners: Analyze cooperative financial settlements to design incentives for residential energy sharing programs.
Tested on one dataset.
Authors
Angel M. González-Rueda, Iago Núñez Lugilde, Jose L. Crespo-Vazquez, Tarek Alskaif
Abstract
This paper proposes a cooperative game-theoretical framework for the financial settlement of real-time deviations in Community-Based Local Energy Markets (CB-LEMs). The real-time settlement process is modeled as a transferable-utility cooperative game, and the resulting Real-Time Local Energy Market (RTLEM) game is shown to be superadditive and balanced. We analyze two game-theoretical allocation mechanisms, the Shapley value and the nucleolus, and evaluate their efficiency, individual rationality, coalitional rationality, and temporal-aggregation properties. We subsequently compare these mechanisms with a settlement rule based on proportional imbalance responsibility. The three mechanisms are efficient and individually rational, but only the nucleolus is guaranteed to satisfy coalitional rationality for every RTLEM instance. The proposed framework is demonstrated using real-world data from a residential energy community in Amsterdam, showing the trade-offs among the three allocation mechanisms in terms of surplus distribution, coalitional stability, interpretability, and computational requirements.