Assessing the value of reactive power service using OPF of reactive power

This paper describes an approach for the optimal power flow (OPF) problem when reactive power supply is priced at marginal cost. This method computes the reactive power and voltage schedules minimizing the total reactive power cost. This allows obtaining curves of needs that would be the beginning for assigning the value of the reactive power generation in a deregulated power market. At the same time, selections of similar remuneration level areas will be possible. The method uses the matrix of sensitivity to linearize the problem. A linear programming technique is used to solve the optimization problem. The method is applicable under normal steady state operation. The uncertainty in reactive power demand is incorporated through Monte-Carlo simulations. The expected reactive power procurement plan for ISO is hence determined. Results of the application of this method, on 6- bus and 12-bus test systems are presented and discussed.