Implications of reactive power on nodal pricing and dispatch

This paper investigates the effect of reactive power constraints on the nodal prices and dispatch in a deregulated pool market. If the market rules are such that the real power is bundled with the reactive power, the nodal prices will have components due to reactive power constraints. The paper describes these price components and explains how the market rules on reactive power acquisition affect these prices. It is shown that these price components are useful market signals to the participants of the market