A Coalitional Insurance Framework for Risk Management of Interconnected Transmission Systems Against Extreme Weather Events

Grid interconnection is a key strategy for strengthening power system resilience to extreme weather events by facilitating intersystem mutual assistance. Despite the overall reduction in risk exposure, significant residual risks remain that could still lead to catastrophic consequences. While insurance offers a means to transfer these risks, conventional standalone models struggle to balance insurer solvency with premium affordability and fail to incentivize participation from lower risk areas. Inspired by spatial risk diversification, this article proposes a novel coalitional insurance framework for weather-related risk management of interconnected transmission systems (ITS). The framework is built on a joint resilience assessment model that quantifies power outage risks in ITS, accounting for intersystem mutual assistance. To solve this model with guaranteed convergence and well-preserved privacy, a distributed optimization approach based on the Bregman alternating direction method of multipliers and iterative optimization is developed. Furthermore, specially designed exante premium and expost indemnity policies ensure equitable allocation and promote coalition participation. Numerical experiments on the IEEE RTS-96 system validate the effectiveness and superiority of the proposed coalitional insurance scheme.