A new benefit-based transmission cost allocation scheme based on capacity usage differentiation

• Published in: Electric power systems research 2022-07, Vol.208, p.107880, Article 107880
• Main Authors: Avar, Ali, Sheikh El-Eslami, Mohammad Kazem
• Format: Article
• Language: English
• Subjects: Algorithms; Beneficial capacity; Benefit-based cost allocation; Capacity usage differentiation; Cost allocation; Electricity distribution; Numerical analysis; Transmission costs
• ISSN: 0378-7796; 1873-2046
• DOI: 10.1016/j.epsr.2022.107880

•A novel robust method is proposed to allocate transmission costs based on users’ economic benefits, which is practical and applicable to any real transmission network.•A new scheme to determine the extent of use of transmission networks is introduced.•The entire beneficial transmission capacity is allocated to its user in a benefit-based manner.•Over-investment in the transmission sector is prevented.•Under-sizing transmission planning in the transmission network is avoided.•Transmission users are encouraged to optimally use the transmission network. This paper proposes a new transmission cost allocation (TCA) scheme, which includes two parts. The first part deals with identifying the transmission capacity that should be allocated. In this section, a novel scheme is introduced, which determines the beneficial capacity based on various operation conditions over the period, during which the transmission capacity is expected to be fully used. Then, only the cost of the beneficial capacity rather than total transmission capacity is allocated to users. This approach towards TCA brings about important advantages: it promotes transmission sustainability and incentivizes more transmission investments while encouraging users to utilize transmission systems optimally and preventing transmission owners from overinvesting. The second part proposes a new benefit-based algorithm for TCA. This algorithm enjoys significant benefits over existing benefit-based methods: none of the current benefit-based TCA procedures can always generate allocation factors, making them impractical, but the proposed method allocates transmission costs in any transmission network, so it can be applied to real systems. Additionally, unlike the existing benefit-based approaches, the proposed method allocates transmission costs by considering users' benefits of the entire beneficial capacity rather than a minor fraction of it. Numerical examples demonstrate the applicability and validity of the proposed TCA scheme.