Fair Division of Costs in Green Energy Markets

Jens Leth Hougaard, Dorte Kronborg, Aleksandrs Smilgins

Research output: Contribution to journalJournal articleResearchpeer-review


This paper considers cost allocation in networks where agents are characterized by stochastic demand and supply of a non-storable good, e.g. green energy. The grid itself creates possibilities of exchanging energy between agents and we propose to allocate common costs in proportion to the economic gain of being part of the grid. Our model includes a set of fundamental requirements for the associated trading platform. In particular, it is argued that a suitable mechanism deviates from a traditional market. The approach is illustrated by simulations.
Original languageEnglish
JournalEnergy: An International Journal
Pages (from-to)220-230
Number of pages11
Publication statusPublished - Nov 2017


  • Cost allocation
  • Networks
  • Gains
  • Electricity
  • Smart grids

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