A Conceptual Structure for Value Based Pricing of Dynamic Reactive Power Support

This paper presents a practical reactive power valuation method in which the VAr value is decomposed into two components. These components are basically different from those in the literature. Using a security constraint optimization model, the proposed scheme allocates two specific amounts of MW transactions to each generator as a dynamic reactive power source. The allocated amounts represent the contribution degree of the VAr resource in the shipment of active power and in the protection of the system against voltage collapse, respectively. The final VAr value is derived using the weighted sum of associated components. Application of the proposed method has been illustrated using IEEE 30-bus test system. Results in different operating conditions are discussed and compared.

I. Introduction

In competitive electricity markets reactive power is one of the important types of system support services. Inadequate reactive power has led to voltage collapses and has been a key cause of several recent major power outages worldwide. Voltage collapse occurred in September 23,2003, in Sweden and Denmark and September 28, 2003, in Italy. And according to the final report of the U.S.-Canada Power System Outage Task Force (April 2004), insufficient reactive power has been an issue in the August 2003 blackout in the United States and Canada [1].