Congestion rents allocation based on transmission usage

In this paper, an allocation method for the congestion rents is presented. The method is based on the use of generalized generation distribution factors (GGDFs) and generalized load distribution factors (GLDFs). These factors are employed to quantify the usage of the transmission system by considering the day-ahead market outcome. Under this allocation scheme, the system conditions are still reflected in the nodal prices since the allocation shares are computed base upon such conditions after the day-ahead (forward) market is cleared. The method is illustrated and compared to others methods in a three-node system, and extended to a five-node system. Both examples are studied with a DC approximation.