Assessment of the economic potential of microgrids for reactive power supply

As power generation from variable distributed energy resources (DER) grows, energy flows in the network are changing, increasing the requirements for ancillary services, including voltage support. With the appropriate power converter, DER can provide ancillary services such as frequency control and voltage support. This paper outlines the economic potential of DERs coordinated in a microgrid to provide reactive power and voltage support at its point of common coupling. The DER Customer Adoption Model assesses the costs of providing reactive power, given local utility rules. Depending on the installed DER, the cost minimizing solution for supplying reactive power locally is chosen. Costs include the variable cost of the additional losses and the investment cost of appropriately over-sizing converters or purchasing capacitors. A case study of a large health care building in San Francisco is used to evaluate different revenue possibilities of creating an incentive for microgrids to provide reactive power.