A framework for transmission loss unbundling and allocation under pool electricity markets

This paper presents a methodology based on the Kirchhoff´s circuit laws, and transaction power flow analysis for unbundling and allocating transmission losses to the participants of a pool-based electricity markets. From a solved load flow and using the basic network equations and not make any simplifying assumptions a new, simples and transparent branch loss formula in injections currents terms of each bus or market participant is derived. It natural separation explicitly expresses the loss allocation at each system branch pertaining to individual bus or market participant. Then, the proposed methodology provides branch unbundling and nodal allocating of transmission losses among power market participants. Extensions and strategies considering unsubsidized loss allocation and loss allocation based on a predefined proportion are also included. Several important aspects related with the allocation fairness and transparency are illustrated and compared by numerical applications with a 4-bus system.