Transmission loss unbundling and allocation under pool electricity markets

This paper presents a methodology based on the circuit theories for unbundling and allocation of transmission losses among the participants of a pool-based electricity market. Starting from a known operation point and using the basic network equations without additional assumptions, an expression of the branch losses based on nodal current injections is derived. Since the power flow equations and circuit theories are satisfied, the methodology turns explicit, in a natural way, separating the losses at each system branch and assigning the responsibility to the respective market participants. It means that the loss allocation of each branch, which is produced by each generator and consumer, is obtained. Extensions and strategies considering unsubsidized and predefined proportion-based loss allocation as well as issues related with the allocation fairness and transparency are also included. Comparisons with previous methods and validation tests of the proposed method are reported by using the IEEE Reliability Test System.