Fairness in Allocation of Transmission Losses to Bilateral Contracts with Superposition and Decomposition Techniques

Abstract

Market mechanism allows the involvement of bilateral contracts in the electricity business competition. However, the participation of bilateral contracts will face various problems, especially the fair allocation of transmission losses. This paper presents the reasonableness share allocation of transmission line losses based on the separation method of current flow in each transmission line from the converging power flow. The methodology is to combine superposition and decomposition techniques in order to produce accurate transmission loss allocation for bilateral parties. The superposition technique formulates the current flow separation in each transmission line, and the decomposition technique defines the allocation of power losses in each transmission line. This technique is called the Combination of the Superposition and Decomposition Method (CSDM). A numerical test has been performed for method validation and compared with the τ-value method. This method has been able to provide a solution for the allocation of reasonable transmission losses. Based on the CSDM, the portion of transmission loss allocation for bilateral contracts compared with the integrated system is 47.9% and 52.1%, respectively. At the same time, the τ-value method provided the proportion of the bilateral contracts compared with the respective integrated system is 80.5% and 19.5%.