Loss Allocation in Joint Transmission and Distribution Peer-to-Peer Markets

Large deployment of distribute energy resources and the increasing awareness of end-users towards their energy procurement are challenging current practices of electricity markets. A change of paradigm, from a top-down hierarchical approach to a more decentralized framework, has been recently researched, with market structures relying on multi-bilateral trades among market participants. In order to guarantee feasibility in power system operation, it is crucial to rethink the interaction with system operators and the way operational costs are shared in such decentralized markets. We propose here to include system operators, both at transmission and distribution level, as active actors of the market, accounting for power grid constraints and line losses. Moreover, to avoid market outcomes that discriminate agents for their geographical location, we analyze loss allocation policies and their impact on market outcomes and prices.