Utility-cogenerator game for pricing power sales and wheeling fees

The authors studied an extensive game model of an electricity market where a cogenerator sells excess electricity to an electric utility or to an end user. They found that a buy-back system (the utility purchases cogenerated power) is as efficient as a cogenerator-customer wheeling system and that these two systems are more desirable than a monopoly system for the regulator. The buy-back rate should be equal to (LP bargaining solution) or less than (Nash bargaining solution) the marginal cost of the electric utility. They also conducted an analysis of a two-period electricity market in which they found that the cogenerator that can supply excess power during peak period obtains the market advantage