HVDC loss factors in the Nordic power market

Abstract In the Nordic countries (Sweden, Norway, Finland and Denmark), many interconnectors are formed by long High-Voltage Direct-Current (HVDC) lines. Every year, operation of such costs millions Euros to Transmission System Operators (TSOs) due high amount losses that not considered while clearing market. To counteract this problem, TSOs (Svenska kraftnat - Sweden, Statnett Fingrid Finland, Energinet Denmark) have proposed introduce linear HVDC loss factors in market algorithm. The assessment a measure requires detailed model system under investigation. paper we develop analyze impact different factor formulations. We show penalize one line over other, can jeopardize revenues merchant regard, propose piecewise-linear factors: simple implement but highly effective solution. Moreover, demonstrate how introduction only is partial solution, since it disproportionately increases AC losses. Our results inclusion eliminate problem.