Value of the Losses in the Delivery Process

Abstract

Electricity is a necessity for modern society. Similar to other commodities, electricity is generated and delivered to consumers through a transmission network. In the delivery process, it obeys Kirchhoff’s laws and undergoes losses. To determine a fair pricing in a deregulated electricity market, an exact analysis of loss is required. Several methodologies have been proposed to evaluate the nodal value of the system loss. However, losses over individual lines have different values. Consequently, the effect of losses on price is difficult to evaluate. In this study, analysts present a new methodology for allocating losses at each bus. Real power flow is decomposed into preserved power flow and lost flow, which are established by applying Kirchhoff’s law to each bus. With this procedure, it is possible to attribute how much power injection is used for preserved flow and loss and, consequently, to evaluate the component of losses in prices.