Method for calculation of cost of electrical power system losses

This paper presents how costs of electrical power losses are calculated in Norway. Network companies use the calculated values for cost of electrical losses (CEL) to establish life cycle costs (LCC) for components or system elements when a change in the power supply system is evaluated. The LCC is comprised of inter alia investment costs, maintenance costs and interruption costs. The calculation of CEL values in Norway is based on socio-economic principles, since the Energy Act of 1991 states that transmission and distribution (T&D) should be optimised using a socio-economic approach. CEL values from different countries are presented and compared. The significant variation indicates that different methodologies are used. The great variation in the ratio between cost of no-load and load losses means e.g. that the dimensioning criterion for substation transformers varies a lot from country to country.