Ex-post Stable and Fair Payoff Allocation for Renewable Energy Aggregation

TL;DR

This paper introduces a simple, stable, and fair payoff allocation mechanism for renewable energy aggregations that works for all possible generation outcomes and can be derived from market equilibrium principles.

Contribution

It proposes a novel ex-post stable and fair payoff allocation mechanism with a closed-form expression for renewable energy aggregations, derived from competitive market equilibrium.

Findings

The mechanism ensures stability and fairness in all scenarios.

Simulation with ten wind farms demonstrates its effectiveness.

The approach aligns with market equilibrium concepts.

Abstract

Aggregating statistically diverse renewable power producers (RPPs) is an effective way to reduce the uncertainty of the RPPs. The key question in aggregation of RPPs is how to allocate payoffs among the RPPs. In this paper, a payoff allocation mechanism (PAM) with a simple closed-form expression is proposed: It achieves stability (in the core) and fairness both in the "ex-post" sense, i.e., for all possible realizations of renewable power generation. Furthermore, this PAM can in fact be derived from the competitive equilibrium in a market. The proposed PAM is evaluated in a simulation study with ten wind power producers in the PJM interconnection.