Reactive power pricing in deregulated electrical markets using a methodology based on the theory of marginal costs

In this paper, a flexible formulation about the pricing of active and reactive power is presented. This proposal is developed using a decoupled formulation identifying the active and reactive subproblems. A model for the price calculation of the reactive power which is intended to incentive the participation of agents of the electricity markets is analyzed. An optimal power flow (OPF) to solve the reactive power subproblem which considers the production costs of the reactive power and the active losses minimization in the objective function, has been implemented. In order to solve the OPF and consequently obtaining the active and reactive power marginal cost prices has been adopted a nonlinear programming methodology. Tests using a 9-bus system for several load conditions show the validity of the methodology