An overview on network cost allocation methods

Abstract

This work is devoted to study and discuss the main methods to solve the network cost allocation problem both for generators and demands. From the presented, compared and discussed methods, the first one is based on power injections, the second deals with proportional sharing factors, the third is based upon Equivalent Bilateral Exchanges, the fourth analyzes the power flow sensitivity in relation to the power injected, and the last one is based on $Z_{\text{bus}}$ network matrix. All the methods are initially illustrated using a 4-bus system. In addition, the IEEE 24-bus RTS system is presented for further comparisons and analysis. Appropriate conclusions are finally drawn.

Introduction

The cost of the transmission network can be interpreted as the cost of maintenance, planning and operation of the infrastructure that involves the transmission system. It is the responsibility of the generators and demands, that are the users of the transmission system, to pay for the network usage of this system. For example, in Brazil, the net basic cost of the transmission network, TUST-RB, whose elements have a voltage equal or above 230 kV, exceeded 3.1 billion dollars in the period of 2005–2006, according to [1].

One of the main challenges to allocate the cost of transmission is how to establish a criterion to split it between generators and demands. According to [15] the methods of network transmission cost allocation should, beyond ensuring the quality of the transmission service (voltage control, static and dynamic stability, etc.), satisfy a set of restrictions for its correct application:

• no cross-subsidies;

• transparency of the cost allocation procedure;

• simple regulatory method;

• adequate remuneration of present and future transmission investments;

• economic signaling for future dimensioning;

• continuity of existing network charges.

Different proposals for transmission network cost allocation have appeared in recent years. The pro rata method, presented in [10] and [11], allocates costs to generators and demands according to the sum of active power produced/consumed by each generator/demand.

Other methods, a bit more complex, distribute the costs based on the active power flow produced by generators and demands through the transmission lines. These methods use the proportional sharing principle, where the flows attributed to each generator and demand in “upstream” lines determine the power flows through “downstream” lines. These flows are associated with the origins and destinations, i.e., generators and demands. Examples of this method can be found in [15], [3], [4], [12].

The network usage method presented in [7] and [8] uses Equivalent Bilateral Exchanges (EBEs) to allocate costs to generators and demands. In order to create an $EBE$, each demand is attributed a generation fraction and, in the same way, a fraction of each demand is attributed to each generator. The attribution of costs by the network usage method occurs considering the impact, in terms of power flow, of each EBE in each transmission line, determined by the DC power flow solution.

The $Z_{\text{bus}}$ method [5] presents a solution based on the $Z_{\text{bus}}$ matrix and considers the current injection at each bus. The combination of these two elements ($Z_{\text{bus}}$ matrix and current injections) determines a measure of sensitivity that indicates what is the individual contribution of each current injection to produce the power flow through of a transmission line.

The nodal method, used in many countries, allocates the network usage costs and provides a measure to determine this allocation based on the power flow sensitivity in each line due to the power injected at each bus. This method can be found in [1].

In the last years, several studies about network allocation considering cross-border exchanges in Europe and Asia have appeared. For example, in Europe, there is a need to find a robust and fair mechanism for Inter-Transmission System Operators (Inter-TSO) compensation in the European internal electricity market to replace the provisional European Transmission System Operators (ETSO) mechanism. One of the main challenges is that the system operator of each country does not have information about the electrical networks of other countries, making the application of any network cost allocation method difficult. These issues can be found in [16], [17], [18], [19]. However, these studies are out of the scope of the paper.

The main objective of this work is to study and discuss the main methods used to allocate the network usage costs. Note that a less exhaustive work that also studies and analyzes several methods to allocate network usage costs in transmission systems is presented in [14]. This paper is organized as follows: Section 2 introduces the main methods present in the literature; Section 3 illustrates the methods using a 4-bus system; a more complex IEEE 24-bus RTS case study is presented in Section 4, and Section 5 presents the conclusions reached with the different methods that are analyzed.