Transmission Loss Allocation: A Comparison of Different Practical Algorithms

A pool-operated electricity market based on hourly auctions usually neglects network constraints and network losses while applying its market-clearing mechanism. This mechanism determines the accepted and unaccepted energy bids as well as the hourly market-clearing prices. As a result, ex post procedures are needed to resolve network congestions and to allocate transmission losses to generators and demands. This paper focuses on transmission loss allocation procedures and provides a detailed comparison of four alternative algorithms: pro rata, marginal allocation, unsubsidized marginal allocation, and proportional sharing. A case-study based on the IEEE RTS is provided. Different load scenarios covering a whole year are analyzed. Conclusions and recommendations are stated.