A novel market-based reactive power management scheme

Deeper deregulation in power supply industry has made reactive power ancillary service management a critical task to power system operators from both technical and economic perspectives. This paper proposes a practical market-based reactive power ancillary service management scheme to tackle the challenge. Reactive power ancillary service procurement and settlement issues are addressed in the paper. Least cost solution is applied to ensure optimal reactive power dispatch when procuring reactive power support. The total minimum reactive cost is separated into two components: one is assigned to the generation side while the other to the loading side. Cost responsibility of the loading side is recovered from reactive power charge of the reactive loads taking the amount of reactive power and location into account. On the other hand, cost responsibility of the generation side is equitably allocated to generators according to their different obligations of providing reactive power to support their own active power delivery in a transmission grid. Reactive power cost compensation to a generator is based on the incurred cost of its reactive power contribution less the cost of its obligation to support the active power delivery. Reactive OPF formulation is developed as an analysis tool and the validity of the proposed scheme is examined using a modified IEEE 14-bus system.