Allocation of transmission losses in presence of both bilateral and pool market models

This paper faces the problem of allocating the transmission losses of a power system where the market requires open access to the grid. In particular, it highlights that the assumptions used in some models can drive to inaccuracy in the results and to an incorrect sharing of losses. The model proposed takes into account the presence of both a bilateral market, where eligible customers can buy electric energy from whatever generator and a captive customers market, where small customers must get electric energy from distributors. In Italy, the two markets are coexistent and this makes the loss allocation more complicated than in a pure bilateral transaction market. The model presented shows how to allocate losses among the several market participants to the two markets. The results and the comparisons are based on the application of the proposed technique to a model of the Italian 380 kV transmission system.