A Coalitional Stable and Fair Reward Allocation for Dynamic Virtual Power Plants

Abstract: This paper establishes crucial cooperation criteria for the operation of Dynamic Virtual Power Plants (DVPPs). We propose a control design and reward allocation mechanism to enable and incentivize Distributed Energy Resources (DERs) to provide dynamic ancillary services (DAS). Our results illustrate how the cooperative aggregation of heterogeneous DERs leverages technical complementarities to outperform standalone DAS provision. The proposed reward allocation fulfills critical game-theoretic criteria, including individual rationality, coalitional stability, incentive compatibility, optimality, fairness and ex-post consistency. The control design and reward allocation are validated using a case study based on the Finnish power grid.