Calculation of transmission loss factors in the presence of constraints

This paper presents a new method of calculating transmission loss factors. The method is distinctive by virtue of the fact that it takes account of the effect of transmission constraints. Since it does not rely on arbitrary slack node assumptions, but is based on a criterion of economic optimality, it produces cost-reflective market signals. The method is demonstrated to produce fundamentally different results from the conventional method. An example network is used to illustrate the method and a comparison is made between analytical and numerical results. This paper also presents an accurate way of calculating loss-adjusted nodal marginal prices, which does not rely on implicit slack node assumptions. It is shown that these prices can be approximated by initially ignoring the effect of losses and subsequently adjusting the resulting prices by the proposed constraint-adjusted transmission loss factors.