A postage stamp transmission tariff with marginal loss based incentive

Transmission tariffs are an essential element in creating a competitive market for electricity. They should provide incentives leading to an optimal use of the limited transmission capacity, something which is not at all the case with the postage stamp tariff as it is used in all European countries at the moment. The authors propose a modified postage stamp transmission tariff. Consumers and generators are charged for the impact they have on grid losses and congestion, through a weighted marginal loss tariff component. The applicability of this tariff is tested for the Belgian grid. The sensitivity of the results to load, transit and generator unit commitment is studied. The results also allow studying the appropriateness of projected sites for new generation and load, and help in identifying weaknesses in the grid.