Market options for reactive power

In England and Wales, NGC´s Ancillary Services Business (ASB) has the obligation to purchase ancillary services (including reactive power), in an economic manner, in order that the system frequency and voltages can be maintained within statutory limits. Prior to vesting, there were negotiations between what is now National Power, PowerGen, the twelve Regional Electricity Companies and the Department of Energy regarding payment for the provision of reactive energy. At vesting, payments for reactive energy were established as fixed monthly payments to each existing generating unit. It was the intention that these payments were to cover the cost of reactive energy, and were calculated by reference to the historic MVArh production of each generating unit in the year 1988/89. Recognising the shortcomings of the existing arrangements, consideration is being given to the development of a market in reactive energy. This presentation addresses some of the issues involved in moving towards such a market