Transmission loss allocation of bilateral contracts using Load Flow Permutations Average Method

In a deregulated power system, bilateral contracts between suppliers and buyers are allowed and transmission loss due to their power transactions should be allocated firmly. In this paper, we introduce “Load Flow Permutations Average Method” (LFPAM), a novel application of Shapely Value method, to assess the transmission loss allocation of bilateral contracts in an electricity market. This method, in which the load flow technique is carried out in an iterative process, lists all possible permutations of the contracts in load flow analysis and runs shapely value technique in order to evaluate the shares of each bilateral contracts of transmission losses. In the other words, after calculating the all contracts' shares of transmission loss in each permutation, the average of the results determines a firm transmission loss allocation of bilateral contracts. Finally, the method has been presented along with some numerical examples to put emphasis on its accuracy and fairness.