Transmission loss allocation using normalized loss weight factors in bilateral contracts environment

One of the major problems in liberalized power markets is loss allocation. In this paper, a new method for allocating transmission losses to bilateral contract market participants is proposed. The proposed method is fundamentally based on Bialek´s “Tracing the flow of electricity” method. The losses is allocated to market participants using the loss weight factors (LWFs) which are obtained from the squared current magnitude and Z-bus matrix. The LWF method is based on a solved load flow and strongly emphasizes on current magnitude while considers network topology. The method has been implemented and tested on several networks and one sample summarized in the paper. The results show that the method has an acceptable performance in various situations.