Power industry has been facing restructuring problems during the past decade. Appropriate management of reactive power is very essential for supporting power system security. Reactive power has dominant effects on real energy transfer. Furthermore, it can support the secure operation of the system as an ancillary service. However, most researches have been focused on active power as the main good transacted in electricity markets. On the other hand, while reactive power production cost is highly dependent on real power output, it is mainly confined to local consumption. As a result, to avoid market power and to maintain the secure operation of the system, a fair cost allocation method seems to be very essential. Appropriate pricing of reactive power as an ancillary service has been a challenging problem during the past decade. However, most methods proposed so far for reactive power pricing are essentially based on empirical approximations. In this paper, a new method for reactive power cost allocation is proposed. The method is based on calculation of the accurate cost which will be imposed on generators due to supporting reactive power. The proposed method is fair, accurate and realistic and it can be formulated very easily. Furthermore, a new approach based on tracing algorithm is proposed for pricing of reactive power which considers the cost of both active and reactive losses allocated to each generator. Application of the proposed method on IEEE 9-bus standard network confirms its validity and effectiveness.

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A new approach for cost allocation and reactive power pricing in a deregulated environment

Modern power system is moving towards a smart and competitive grid, with competing generating companies, power retailers, and strategically behaving consumers playing a crucial role in the daily operation of the system Independent System Operator (ISO) monitors these daily operations and procure required services through market operations Active and reactive power pricing in real-time at the wholesale and retail level is considered an efficient energy management method However, procurement of reactive power through a market mechanism in real-time is not being implemented, despite its crucial role in maintaining system parameters within the permissible limits This paper attempts to detail the challenges faced in implementing such reactive power markets and presents a review of existing reactive power market mechanisms to address these challenges A framework suitable for reactive power ancillary service in a smart grid is also detailed in this paper

A comprehensive survey on reactive power ancillary service markets

In deregulated power systems, reactive power ancillary service through electricity market is becoming relevant where private generation companies participate in maintaining system wide bus voltage within the permissible limits. Marginal cost price (MCP) based real time reactive power ancillary service market faces several challenges due to the localized nature of reactive power. In this paper, a market mechanism for real time reactive power ancillary service market based on Stackelberg game model is proposed considering voltage-apparent power coupled subsystems. In the proposed Stackelberg game model, Independent System Operator (ISO) is considered as the leader, and GENCOs as followers. In the formulation, each GENCO is associated with a relevance factor in the partitioned subsystem so as to consider the real time voltage support requirement in the system. The market is then formulated as Mathematical Program with Equilibrium Constraints problem (MPEC). Existence of equilibrium, incentive compatibility, and individual rationality of the proposed market mechanism is then analysed in this work. The numerical examples are illustrated in PJM 5-bus system, and tested on IEEE 30- bus system, and Nordic 32 Bus-system. The mechanism induces truth-telling behavior of GENCOs, yields a non-negative profit, and the system wide bus voltage is improved.

Game Theoretical Approach to Novel Reactive Power Ancillary Service Market Mechanism

Major objective for the Thermal power generation is to minimize fuel consumption by allocating optimal power generation from each unit subject to equality and inequality constraints. In most of cases fuel cost consist of active power cost only however reactive power is very essential for secure and reliable operation of power systems, so the reactive power cost has to be included in the cost calculation function. However, reactive power production by a generator will reduce its capability to produce active power. Hence, provision of reactive power by generator will result in reduction of its active power production, so the reactive power pricing is equally important with real power pricing, therefore a fair price calculation method seems to be essential. The objectives considered in this paper are minimization of active power cost and reactive power cost subject to equality and inequality constraints. In this paper Particle Swarm Optimization (PSO) technique has been applied to minimize both active and reactive power cost. The equality constraints have been handled by exterior penalty method. In order to show the effectiveness, the proposed approach has been tested on IEEE 9-bus standard network. Numerical results obtained from the proposed approach are compared with another technique confirms its validity and effectiveness.

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Combined Active and Reactive Power Dispatch Using Particle Swarm Optimization

14 ABSTRACT Conventional methods of determining and allocating of reactive power costs which are based on power factor do not provide an accurate method to consumers reactive power pricing. While support for ensuring proper and continuous reactive power is needed to generate sufficient incentives to generate reactive power. To motivate participates, it is needed to create an economic structure of reactive power. In this paper, a method for determining the cost of reactive power is presented considering direct and indirect costs in generating and transmission. The developed tracing method for allocating reactive power cost is introduced. Simulation results in the IEEE 30-bus test system are considered to test and validate the proposed method. The methodologies, results and discussion presented in this paper show that the presented method is practical and has reasonable speed for determination and allocating reactive power cost.

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Using Tracing Method for Calculation and Allocation of Reactive Power Cost

Reactive power service is one of the most important ancillary services in electricity market. In this article the combined reactive power market model is proposed, encompassed with regulated financial compensation of the costs for reactive power sources and value-based reactive power pricing. The methodology of calculation of costs of generators, synchronous condensers and static reactive power sources for economical evaluation of reactive power service was created. In the investigational part the reactive power market model was applied for Lithuanian power system to determine the amount of compensation for reactive power sources.

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R. Staniulis

Papers

Pricing of reactive power service