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 nonaccepted 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: (1) pro rata (PR); (2) marginal allocation; (3) unsubsidized marginal allocation; and (4) proportional sharing. A case study based on the IEEE RTS is provided. Different load scenarios covering a whole year are analyzed. Finally, conclusions and recommendations are stated.