Transmission loss allocation: I. Single energy market

This paper presents a new methodology for allocating transmission losses to the participants of a single energy market. The proposed approach is based on the incremental transmission loss concept and is implemented through two models: basic and extended. In the basic model, the total system losses are estimated through the linear DC load flow equations, while the extended model uses the exact AC formulation. The concept of center of losses is used; a fictitious bus in the system network where all transactions are compensated for transmission losses. Both models provide a sharing of transmission losses among generators and loads based on a predefined proportion, for instance 50%:50% for each participant class. Some important aspects related with the allocation fairness and transparency are illustrated by numerical applications with the IEEE Reliability Test System. The extension of this methodology to interconnected energy markets is treated in a companion paper.