Using Cooperative Game Theory to Analyse Allocations of Costs Related to Connecting Renewable Energy to the Power Grid

Abstract: Building new wind farms is an important part in the transition to renewable energy. However these projects often require large investments, and the cost of upgrading the existing infrastructure - to allow for the connection of new parks - is a component that cannot be ignored. When several wind farms seek interconnections, they are forced to collaborate and financing the connection. This leads to the question of how these costs should be shared between different agents. We investigate whether the currently used allocation method can and should be replaced with a fairer method, by formulating the problem as a cooperative game and using some well-established fairness axioms. Furthermore we apply our findings on the real case example Havsnäs wind farm in Sweden, as well as some fictive examples. Our findings show that in most cases, the current method where costs are divided proportionally to the total effect that the wind farm produces, is best suited. However, in some particular examples a more intricate mathematical method of cost sharing would be preferred.