Cost Allocation Method Research Articles

Uplift Allocation of Voltage and Local Reliability Constraints

Centralized electricity markets currently do not optimize reactive power and voltage in the market clearing software. Voltage and local reliability (VLR) commitment requirements are mostly identified through out of market operational procedures. Failure to maintain VLR may incur voltage collapse, generation, transformer loss, or even blackout. Midcontinent Independent System Operator (MISO) employs binary constraints, minimum/maximum generation constraints, interface constraints, and manual commitments to address VLR requirement in the market clearing process and ensure adequate commitment for reliability. This paper integrates binary VLR constraints in day-ahead security constrained unit commitment to improve market efficiency. However, VLR constraints may cause uplift cost, and sometimes the associated uplift cost can be significant. An uplift cost allocation method with the consideration of resources commitment reasons is developed in this paper. The proposed approach is considered for implementation in MISO market clearing process and a MISO test case is used to validate the effectiveness of the proposed approach.

An Analysis of Biform Game Strategies for Supply Planning in a Full Distribution Network: Case of a Bottling Company

This work focuses on two-step decision problem through a biform game. At the first, in an uncertain environment, each distribution center must define the quantities to be ordered from the production units in order to maximize its own gain. This requires a good forecast of demand. When the demand is deterministic, the centers collaborate to meet their local demand. In this case, it is necessary to define the appropriate cost allocation method, especially since no method guarantees all the properties defined by the literature. This paper proposes an application case of bottling company in morocco. We use neural networks to forecast demand. In the phase of collaboration, we split cost using different methods and analyze results.

Assessment of off-design performance of a combined cooling, heating and power system using exergoeconomic analysis

This paper presents the exergy and exergoeconomic analyses of a typical combined cooling, heating and power (CCHP) system under off-design conditions. The exergoeconomic-related parameters and unit exergoeconomic cost of the flows are discussed using the exergy cost allocation method based on energy level (ECAEL). The absorption chiller is found to have an improved potential because of the highest relative cost difference and its continual increase with the decrease of the output power. According to the exergoeconomic factor analysis, the exergoeconomic performance of the turbine and combustor among all the components can be enhanced by decreasing the investment and destruction, respectively. Next, the unit energy costs of different products in the output power range (100–20%) including electricity, cooling and heating energy for users, are calculated. The results show that the electricity increases faster than that of other products from 0.537 to 1.077 Yuan/kWh. Finally, the sensitivity analyses for the unit energy cost of the products are presented with different influencing parameters, such as the natural gas price, service life and discount rate. This exergoeconomic analysis may provide guidance for evaluating the products in distributed energy systems for energy networks.

Comparison of the levelized cost and thermoeconomic methodologies – Cost allocation in a solar polygeneration plant to produce power, desalted water, cooling and process heat

The present work shows a comparison between the levelized cost and the thermoeconomic methods in their application to assess the performance of a solar polygeneration plant. The aim is to analyze the costs allocation process, the unit specific costs of each product, as well as the energy and exergy efficiencies, which allows to identify the main advantages of both the evaluated methods. The methodology is applied in a case study configured by a concentrated solar power with thermal energy storage and backup system, combined to a multi-effect distillation plant, an absorption refrigeration plant, and a process heat module. The present study reveals that through the levelized cost method, the cost associated to the electricity generation is higher than it is by applying the thermoeconomic method, whereas the costs of water, cooling and process heat are significantly lower. Those differences represent an increase of about 35.1% in the case of the electricity, and a reduction in the cost associated to the water, cooling, and heat production by around 34.4%, 78.1%, and 97.6%, respectively. Results show that the thermoeconomic method is an equitable and rational cost allocation method which is suitable for a solar polygeneration plant. This method is recommended when a more precise analysis is required to assess the proper costs of different products, and for assessing the benefits of a polygeneration plant, when compared to stand-alone plants. However, the levelized cost method is a simple and fast method, and a deep knowledge of thermodynamics is not required, being recommended when in need to perform a first approach of the costs of each product.

A new heat cost allocation method for social housing

To promote energy saving in the residential sector Directive 2012/27/EU has set the obligation for buildings supplied by central heating sources to install individual heat metering and accounting systems. However, in social housing, bills based exclusively on individual consumption should be unfair due to some unfavourable situations, such as first and top floors, presence of unheated common spaces, north oriented dwellings. Nevertheless, fair heat accounting rules should be introduced especially in social housing buildings, which are often thermally underperforming with inefficient heating plants and tenants are commonly low-income people and elderly. On the other hand, common regulations for heat accounting providing compensation to avoid inequalities among tenants have not been set and different approaches on this topic are present among EU Member States. In this paper the authors present a new heat accounting method for social housing based on the estimation of extra-consumptions due to building inefficiencies. According to this method, extra-consumptions are charged to all tenants in order to encourage energy efficient retrofit interventions. Finally, the new method has been experimented in a typical social housing building in Italy and compared to other methods applicable in EU, evidencing some advantages and weaknesses.

A cooperative game approach for coordinating multi-microgrid operation within distribution systems

This paper focuses on simulating the potential cooperative behaviors of multiple grid-connected microgrids to achieve higher energy efficiency and operation economy. Motivated by the cooperative game theory, a group of individual microgrids is treated as one grand coalition with the aim of minimizing the total operation cost. Next, given that each microgrid operator is an independent and autonomous entity with the aim of maximum self-interest, a cost allocation method based on the concept of core in the cooperative game is implemented to ensure a fair cost share among microgrid coalition members, which guarantees the economic stability of the coalition. Considering the combinatorial explosive characteristic of the cost allocation problem, Benders Decomposition (BD) algorithm is applied to locate the core solution with computational efficiency. In addition, since microgrid coalition is formed at the distribution system level, network losses is not negligible. After considering network losses, the coalition operation model of multi-microgrid becomes an optimal power flow problem. A linearized optimal power flow for distribution (LOPF-D) model is applied instead of the conventional ACOPF model to reduce computation burden, meanwhile maintaining adequate accuracy. Case studies on standard IEEE systems demonstrate the advantages of multi-microgrid cooperation and the robustness of the formulated grand coalition. In addition, comparisons with the conventional ACOPF model verifies the high performance of the proposed LOPF-D model.

Research on Cost-sharing Mechanism of Frequency-modulated Auxiliary Service in Different Regions Based on Analytic Hierarchy Process

As the market environment is different, the same frequency modulation (FM) auxiliary service cost sharing mechanism is not applicable to all regions, and the appropriate cost allocation method should be chosen to undertake the cost of FM auxiliary services. According to the product characteristics of FM auxiliary services, several feasible cost transmission paths are designed. By using the analytic hierarchy process (AHP), the most suitable cost transmission path is obtained.

Transmission Cost Allocation Based on Data Envelopment Analysis and Cooperative Game Method

Transmission cost allocation is a traditional but challenging problem in electric power industries. Many factors can affect the transmission cost allocation. But most traditional allocation methods focus on just one point. The Data Envelopment Analysis (DEA) approach has the characteristic of multi-criterion. It can overcome the drawbacks of traditional allocation methods. This paper combines the game theory and DEA approach to solve the problem of transmission cost allocation. In order to take various key points of power transmission into account, three criterions are proposed. These criterions reflect the effect of load demand, transmission line usage and marginal cost on transmission cost allocation. Nucleolus and Shapley value are used to solve the DEA game programming. For measuring the fairness of the transmission cost allocation methods, this paper proposes an algorithm to evaluate the satisfaction of users with the different allocation methods. The DEA game approach is applied to IEEE 14-bus system. The results which are compared with that of other three traditional allocation methods demonstrate the applicability of the proposed method.

Reactive Power Pricing Model Considering the Randomness of Wind Power Output

With the increase of wind power capacity integrated into grid, the influence of the randomness of wind power output on the reactive power distribution of grid is gradually highlighted. Meanwhile, the power market reform puts forward higher requirements for reasonable pricing of reactive power service. Based on it, the article combined the optimal power flow model considering wind power randomness with integrated cost allocation method to price reactive power. Meanwhile, considering the advantages and disadvantages of the present cost allocation method and marginal cost pricing, an integrated cost allocation method based on optimal power flow tracing is proposed. The model realized the optimal power flow distribution of reactive power with the minimal integrated cost and wind power integration, under the premise of guaranteeing the balance of reactive power pricing. Finally, through the analysis of multi-scenario calculation examples and the stochastic simulation of wind power outputs, the article compared the results of the model pricing and the marginal cost pricing, which proved that the model is accurate and effective.

Stability Analysis of Cost Allocation Methods for Inventory Routing

This paper considers the Inventory Routing Problem under two different inventory replenishment policies, namely the Maximum Level replenishment policy and the Order-up-to Level policy. The distribution cost under both replenishment policies is determined and allocated over the retailers that are served by the supplier. The distribution cost is obtained through an exact solution algorithm by Archetti et al. (2004). Various allocation methods, like proportional rules, methods based on separable and non-separable cost and game theoretic allocation concepts (Shapley value, nucleolus, pre-nucleolus), are used to allocate the cost over the retailers. Once the distribution cost and the cost allocations are obtained, the objective is to quantify and analyze the stability or instability of the cost allocation resulting from the various allocation methods.

Allocating collaborative costs in multimodal barge networks for freight bundling

In order to improve the competitive position and efficiency level of multimodal transport, consolidation of freight flows is often suggested. Bundling networks require cooperation between multiple partners in the multimodal transport chain. In this context, the question rises how benefits may be allocated fairly among the spatially distributed participants in the cooperation. A great deal of scientific literature reports on the behavior of allocation methods in collaborations between shippers or carriers making use of unimodal road transport. However, research on cost or savings allocation methods in multimodal transport is scarce. The main contribution of this paper is thus to provide a first insight in the complexity of sharing cost savings fairly among shippers who bundle freight flows in order to reach economies of scale in multimodal barge transport. By applying four different allocation methods to two realistic case studies, a comparison is made between simple and straightforward allocation mechanisms and more advanced techniques based on cooperative game theory. Special attention is paid to the savings division among coalition partners and collaborative stability. Results demonstrate the influence of cooperation characteristics on allocation outcomes and underline the value of carefully selecting appropriate allocation mechanisms when long-term stability of the multimodal barge collaboration is aspired.

Exergoeconomic analysis of a combined cooling heating and power system under different operating strategies for gas turbine

The off-design performance of combined cooling heating and power system (CCHP) is affected by the system configuration and operating strategy. The turbine is the essential composition of the CCHP system. The off-design performance is affected by the part-load operating strategies for the gas turbine consisting reducing the mass flow rate of fuel (TIT), changing the inlet guide vane position of gas turbine, flue gas reinjecting operating strategy, the reducing pressure of compressor inlet air (IAT) and so on. The IAT alternative operating strategy is proposed by our group. The density of compressor inlet air is decreased by throttle device and therefore the mass flow rate is decreased. Because of the constant volume of gas turbine, the output power is decreased. Different from the TIT operating strategy, more high-temperature flue gas is produced resulting in more production of cooling and heating. Consequently, the flue energy saving ratio and over efficiency of the system is improved under the IAT operating strategy. The energy analysis and exergy analysis based on the first and second law of thermodynamics are often applied to evaluate the off-design performance of the CCHP system. Due to the neglection of non-equivalence irreversibilities within different components and components investments, two methods have some limitation when analyzing a multi-product system. Thermoeconomic analysis combined economics and exergy analysis has been used to address these limitations. Based on above-mentioned exergoeconomic analysis, several studies have been conducted for different multi-product system. Nevertheless, the selection of an appropriate cost allocation of final products is one of the critical factors for indicating the ration and efficient consumptions of fuel. Some of allocation methods have been proposed, typically, such as the extraction method, the equality method, Last In Fist Out method, Specific Exergy Costing method and so on. However, it′s about the fact that the relationship between the unit exergy cost and energy quality of the flows are ignored by these methods hardly reflecting good quality and high price. Considering the quality change in the energy utilization process, the exergy cost allocation method based on energy level (ECAEL) is proposed by our group. The energy utilization process is divided into multiple differential sections, and the exergy cost of each flow is calculated continuously. In this paper, the ECAEL method is carried out on a typical CCHP system. First the thermodynamic model for this system is defined to analyze the off-design performance among different components. Furthermore, the exergoeconomic costs of all flows are calculated by solving the exergy and allocation equations with design conditions. The effects between the TIT and IAT operating strategies on the off-design performance of this system are presented. According to exergy analysis, the combustor is found to have the highest exergy destruction, followed by absorption chiller. The exergy destruction of these components can be reduced by increasing cost to optimize the structure or the operation structure. Moreover, the results show that the IAT operating strategy can significantly reduce the cost of production compared with the TIT operating strategy. The annual profits of this system under the IAT operating strategy is higher than under the TIT operating strategy for the part-load range.

On the “Graphic + T account” Teaching Method of Auxiliary Production Cost Allocation

Method of auxiliary production cost allocation is the key points and difficulties in cost accounting teaching, the author through the "icon + T account" teaching method, the abstract theory of visualization, complexity of knowledge simplification, achieve good teaching effect.

Research on the Cooperative Game under Joint Distribution Based on Integrated Logistics Solution for Small and Medium-sized Electronic Commerce Enterprises

In recent years, small and medium-sized e-commerce enterprises show the trend of rapid growth. However, separate enterprise distribution and self-build warehousing storage gradually highlight the shortcomings of high cost and low efficiency. Considering the features of small and medium-sized e-commerce enterprises, it is suitable to apply joint distribution combined with them. Joint distribution relates to the interests of the cooperative enterprises, which means reasonable cost allocation method and profit allocation mechanism are the key to promoting the normal operation of the joint distribution. This paper took the distribution enterprises which service for the small and medium-sized e-commerce enterprises as the background, put forward the joint distribution mode for small and medium-sized electronic commerce enterprises, established the multilateral game mode for joint distribution based on the related knowledge of game theory, and studied the cost allocation and profit distribution. This paper provides integrated logistics joint solution for small and medium -sized e-commerce enterprises.

Emissions allocation in transportation routes

This article studies the allocation of CO2 emissions to a specific shipment in routing transportation. The authors show that this problem differs from a cost allocation problem specifically because the concavity condition does not hold necessarily in the CO2 allocation problem. This implies that a traditional cost allocation method cannot be straightforwardly translated into a CO2 allocation problem, and thus, new methods need to be developed. This study proposes four allocation mechanisms that are extensions from the literature and the common practice in industries. In doing so, the authors introduce the concept of carbon efficiency to assess if a particular allocation rule drives companies to carbon emissions reduction. They present analytical properties that show that the current practice of allocating CO2 emissions based on the greenhouse gas protocol, fails to be sensitive to drive companies to the sustainable practice of placing consolidated orders. The authors also conduct an experimental analysis using data of a logistics service provider that operates in Europe. Using the results of the experiments, they show that simple allocation methods can lead to a fair and carbon efficient allocation. In addition, the study provides insights by conducting a sensitivity analysis, and it shows that the CO2 allocations are not substantially susceptible to shipment size estimation errors.

Scenario-Based Tsunami Evacuation Analysis: A Case Study of Haimen Town, Taizhou, China

In current tsunami prevention and mitigation, evacuation is the most important method of saving people’s lives. Tsunami evacuation is analyzed for a given travel time and a specific inundation area. Before evacuation analysis, the tsunami inundation and tsunami travel time are first calculated by numerical modeling. This paper analyzes the tsunami evacuation of Haimen Town, Jiaojiang District, Taizhou City, China, under the hypothesis of a magnitude 9.0 earthquake scenario in the Ryukyu Trench. The Cornell multi-grid coupled tsunami (COMCOT) model and Tsunami Travel Time (TTT) model are used to calculate the tsunami inundation and tsunami travel time, respectively. GIS techniques are used to solve the evacuation problem. Both horizontal and vertical evacuations are adopted based on the Chinese community characteristics, disaster prevention facilities, land use, and other practical conditions. A cost raster is used to analyze the arrival cost of each grid in the study area. The location allocation and cost allocation methods are used to solve shelter selection and coverage problems, respectively. The network analyst is applied to provide evacuation routes for each community. The evacuation analysis results can provide a scientific reference for the development of tsunami evacuation plans.

Blood Components as Joint Products: A Literature Review of Cost-Allocation Methods

The object of this review is to present and to shed light on joint cost-allocation methods that are used in the healthcare sector for pricing purposes or cost-effectiveness purposes in different countries. The concept of jointness is illustrated through joint products and joint costs as found in the example of blood component production. The descriptive review, fundamentally concept-centric, highlights that the cost of blood products or blood price-setting is an issue in legislative proposals at the national and state levels and represents a matter of public interest and of public regulation. In applying economic models (based on economic principles and behavior axioms) rather than accounting methodology (based on physical measures or on market value of the split/final products), scholars have brought to light the problems arising from the continuous search for a neutral method for allocating joint costs in the blood production sector. Numerous studies have focused on the blood costs for the health system. Nevertheless, the cost accounting and reimbursement system effectively underlying the acquisition, screening, and transfusion of blood appears, in practice, to be largely obscure. Moreover, the literature provides little insights into the level of “relative importance” assigned to each product in the costing setting. The current status of the discussion offers opportunities for future researches, which could be directed toward investigating the relationships between national systems of healthcare services and the cost-allocation methods used to determine the cost/price of blood components, analyzing the effect of public regulation on blood costs and, lastly, developing a method based more on the benefit-value to users.

Exergy cost allocation method based on energy level (ECAEL) for a CCHP system

A systematic method (ECAEL) is proposed for defining additional allocation equations and calculating the exergy cost of flows in thermal system. This method is based on the concept of the energy level, in which the continuous cost change within each component is considered. Thermoeconomic analysis using this method is carried out on a combined cooling, heating and power (CCHP) system, which consists of a gas turbine (TUR), an absorption chiller (ABC) and a heating water heat exchanger (HWHE). The thermoeconomic model for this system is defined to evaluate the productive relationships among the different components. The costs of all flows are calculated by solving the exergy consumption and allocation equations with design conditions. Moreover, a comparative analysis between proposed exergy cost allocation method and the conventional method is presented. As a result, the proposed method not only provides an accurate cost allocation output but also presents the dynamic cost of the flows within each component. Finally, the unit exergy cost is converted into the unit energy cost to evaluate the final products. According to this method, the unit energy costs of electricity ranks highest, followed by those of chilled water and heating water. The proposed method provides an option to complete the thermoeconomic analysis of multi-product systems.

Evaluation Methodology for Tariff Design under Escalating Penetrations of Distributed Energy Resources

As the penetration of distributed energy resources (DERs) escalates in distribution networks, new network tariffs are needed to cope with this new situation. These tariffs should allocate network costs to users, promoting an efficient use of the distribution network. This paper proposes a methodology to evaluate and compare network tariff designs. Four design attributes are proposed for this aim: (i) network cost recovery; (ii) deferral of network reinforcements; (iii) efficient consumer response; (iv) recognition of side-effects on consumers. Through an analytical hierarchy process (AHP), the evaluation methodology is applied to compare traditional cost allocation methods, on the basis of 100% energy, 100% demand, and 50% energy-50% demand, with more advanced pricing methods based on distribution locational marginal prices in combination with cost-reflective network charges. Numerical results are obtained through a case study based on the IEEE 34-node test feeder with DER integration. The results illustrate the advantage of advanced pricing methods to promote an efficient integration of DER and demand price-response from consumers.

Experimental Analysis of a Heat Cost Allocation Method for Apartment Buildings

The correct estimate of individual thermal energy consumptions, and consequently, a fair heat cost allocation among the residents of apartment buildings with centralized heating systems, represents an important driving force towards energy saving, energy efficiency and the reduction of pollutant emissions. Nowadays, in those contexts where direct heat meters cannot be used because of the layout of the hot water distribution system, electronic Heat Cost Allocators (HCAs) have the highest market share for the assessment of individual thermal energy consumptions. The uncertainty associated with the parameterization of heat cost allocation devices and the installation effects arising in real applications can negatively affect the accuracy of these devices, as far as the estimation of the individual fractions of thermal energy consumption is concerned. This work deals with the experimental analysis of a novel heat cost allocation method for apartment buildings and its comparison with conventional HCAs. The method allows the indirect estimation of the thermal energy exchanged by water radiators without the need for surface temperature measurements, reducing some of the drawbacks associated with the on-site installation. The experimental analysis was carried out in a full-scale central heating system test facility available at the Italian National Metrology Institute (INRIM) and characterized by SI-traceable direct heat meters installed on each water radiator.