The effect of welfare distribution and cost allocation on offshore grid design
Publication type
Journal article with impact factorPublication Year
2014Journal
IEEE Transactions on Sustainable EnergyPublication Issue
Special issue
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Show full item recordAbstract
Innovative offshore grid designs such as integrating offshore wind farms (OWFs) with interconnectors are gaining popularity. Adequate investment in these designs requires aligning the interest of stakeholders through an appropriate cost allocation method. The aim of this paper is twofold. First, it shows how welfare distribution can influence a stakeholders offshore grid design choice. Second, it evaluates the effect of various cost allocation schemes in aligning diverse stakeholder interests toward efficient grid design. The results confirm that an investment in an efficient offshore grid design may not be guaranteed as long as the chosen cost allocation method ignores the welfare distribution effect. Most methods fail in this regard. Even when they provide cost incentives, they do not always ensure cooperation. Cognizant of this limitation, this study proposes a method that allocates costs in proportion to the incremental net benefit (PINB) of each stakeholder. This method reflects both the distribution of welfare and cost savings.Keyword
EntrepreneurshipKnowledge Domain/Industry
Entrepreneurshipae974a485f413a2113503eed53cd6c53
10.1109/TSTE.2014.2325911