Optimal compensation of transmission losses in a multiple-transaction framework

This paper presents an optimal power flow formulation in which the generation is dispatched in order to compensate for losses allocated to different transactions. Since the loss allocation itself depends on the solution, the two problems are combined and solved together. Loss allocation scheme developed by the authors earlier [Ding Q, Abur A. Transmission loss allocation in a multiple-transaction framework, IEEE Trans Power Syst 2004;19(1):214–20] is used in this formulation. It is assumed that each transaction is entitled to select its own designated generators to compensate for its allocated losses. The case where some transactions prefer instead to let the independent system operator (ISO) to provide the loss compensation service is also considered. An optimization procedure, which yields the least-cost compensation from participating generators, is developed for this purpose by using an OPF model. Several numerical examples are included to demonstrate the proposed procedures.