Cost-based reactive power pricing with voltage security consideration in restructured power systems

In the restructuring power industry, voltage security has become a challenging problem since power systems tend to operate closer to security boundaries and as a consequence, the voltage instability, which is caused by insufficient reactive power supply, poses a serious threat to system security and reliability. Establishing an equitable and effective reactive power market with consideration of the voltage security problem is very important to provide a reliable restructured power system. Therefore, this paper proposes a cost-based reactive power pricing, which can integrate the reactive power cost minimization and the voltage security problem into the optimal power flow (OPF) problem, and the sequential quadratic programming (SQP) is employed to solve the optimization problem. The effectiveness of the proposed method is verified using a modified IEEE 14-bus system. A study on the effects of the voltage stability margin (VSM) requirement under normal condition and contingencies on the reactive power cost is also presented.