An efficient distribution factors enhanced transmission pricing method for Australian NEM transmission charging scheme

The implementation of the Carbon Pollution Reduction Scheme (CPRS) and the expanded Renewable Energy Target (RET) which drive to a smart grid application are likely to have a significant and ongoing impact on energy markets in Australia. One of the key issues is the transmission pricing scheme. The main task in the development of the transmission service charges are it must be non-discriminatory, transparent, economically efficient, and allow full recovery of costs. Most importantly, the pricing strategies should implement fairness and practicality. Currently, the National Electricity Market (NEM) has been using the Cost Reflective Network Pricing (CRNP) and Modified Cost Reflective Network Pricing (MCNRP) method for allocating the transmission service charges among the load. The drawbacks of both methods are: (1) the load will be burdened with high TUoS charges as this charges are only paid by load (2) inaccurate transmission usage evaluation as the contributions of counter-flows are totally being neglected. Therefore, in this paper, a novel transmission pricing method which is called Distribution Factors Enhanced Transmission Pricing (DFETP) method is introduced in order to increase the utilization efficiency of the network as well as to promote the green technology in a market environment. The proposed approach is tested on the 10-machine IEEE 39-bus (New-England) system and 59-bus system of the South East Australian power system using Matlab simulation program to prove its effectiveness.