Profit allotment of IPPs in retail electric market based on cooperative game theory

In the retail market, if an independent power producer (IPP) can obtain its maximum profit through collaborating with others to form a coalition, it will prefer to collaborate to form this coalition rather than to participate individually. In this paper, the authors discuss the cooperation of IPPs in the retail market and give a formulation about the calculation of IPP´s profits. based on game theory, they propose a method to decide the profit allocation to each IPP in the coalitions. Through comparing the results between noncooperative games and cooperative games on a test system, the principle that cooperation is better than competition for IPPs is verified and the feasibility of the proposed method is demonstrated.