Allocating the cost of reactive power by using modified value based approach and tracing method

In an open accessed transmission system, the costs of each ancillary service will be unbundled. This paper presents two methods, i.e., a value based approach and tracing method of allocating the cost of reactive power purchased by contract or from a bidding market. These methods have gain importance as their solutions help in evaluating a fair and transparent tariff plan. The applicability of these approaches is illustrated with a five bus case study.