Compensation Mechanism Research of AGC Based on the Theory of Externality and Common Resource

Abstract

The AGC (Automatic Generation Control) bring external effect for other units, power companies, users and society with its externality. Unreasonable compensation will undermine the enthusiasm of AGC units. At the same time, AGC has a supply-side attributes of common resources, and it may have a "free rider" behavior in four dimensions of capacity, quality, cost and price. According to two exclusive ideas of compensating external benefits for AS and increasing the cost of exclusion, it builds evaluation indexes system and sets up the basic model for compensation mechanism of AGC, then taking an example to analysis in which it reflects the narrowing gap among units’ profit and the recovery of units’ marginal social cost.