Modelling Electricity Trading in the Northeast

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In this article, a MARKAL model of electricity trading between four regions is presented and used to simulate the advantages derived from cooperative planning of electricity generation in Northeastern America. The four regions (Québec, Ontario, New York, New England) must satisfy their respective electricity demands and capacity reserves over the 1990-2020 horizon via a combination of their own production and purchases from other regions. Each pair of regions may decide to develop additional interconnecting capacity over the chosen horizon, so as to increase electricity exchanges between them. By arguing that the grand coalition of the four regions has synergy, we compute the cost savings realized by the grand coalition versus the status quo. It is also proposed to split these savings by means of the Shapley value, which is especially well adapted to such a situation. To compute the Shapley value, it is necessary to run the MARKAL model with each of the possible combinations of interconnecting lines capacities.

, 15 pages