A novel loss allocation in pool markets using weight-based sharing and voltage sensitivity analysis

Fair loss allocation is one of the main requirements in electricity markets. This paper presents a loss allocation method in pool markets which allocates each component of transmission losses based on its characteristics leading to a fair, certain and transparent method. The proposed method expresses system losses in terms of the Z-bus and power injections. Then, the system losses are divided into two components addressing the direct and indirect effects of power injections. Two different methods are investigated to allocate such components including a weight-based sharing and a novel analytical voltage sensitivity analysis. The paper presents an accurate separation between the share of active and reactive power injections in each bus. Numerical results show considerable aspects of allocation fairness and transparency, which indicates the good performance of the proposed method compared to former studies.