Sensitivity of Var compensation economic benefits considering generator marginal cost

The natural gas price surged in 2004. As a result, the marginal cost of some generators burning gas also rose sharply. This paper is in response to the sharp increase in gas price and the corresponding generator marginal cost. This paper will first investigate the benefits of Var compensation including reduced losses (B₁), shifting reactive power flow to real power flow (B₂), and increased transfer capability (B₃). Then, an OPF-based quantitative approach is used to assess the three benefits. Finally, the scheme of Var economic benefits sensitivity analysis to generator marginal cost is proposed. Tests are conducted on a system with seven buses in two areas. The simulation results show that a positive relationship exists between the generator marginal cost in the load center and the Var economic benefits, and a negative relationship exists between the generator marginal cost in the generation center and the Var economic benefits.