Transmission loss compensation in multiple transaction networks

We develop and apply the equivalent loss compensation concept to construct flexible and effective procedures for compensating losses in a multi-transaction network. The procedures are developed in the multiple transaction framework and are based on the physical-flow allocation of losses among the transactions. The proposed procedures provide transactions the choice of selecting self-acquisition of loss compensation at designated bus(es) or to purchase the loss compensation service from a central independent grid operator (IGO). The IGO can provide loss compensation as a value-added service to its transmission customers, IGO-acquisition of loss compensation uses a linear program formulation in which network constraints are explicitly represented to determine the solution which gives the least-price at which the IGO can acquire the service. The self-acquisition service may co-exist side-by-side with the IGO-acquisition and any physically feasible combination of these acquisition schemes is possible. The effectiveness and flexibility of the procedures are illustrated with numerical results using the IEEE 118- and 300-bus systems.