Impact on real and reactive power pricing in open power market using unified power flow controller

Transmission pricing is an important issue in view of increased deregulation. A nonlinear optimization problem has been formulated to maximize the social welfare in the open power market using a unified power flow controller (UPFC) in this paper. With a static point of view, congestion management installation of UPFC requires a two-step approach. First, the proper location of these devices in the network must be ascertained and then the settings of its control parameters optimized for the required objective. Nodal spot prices for both real and reactive powers have been computed using optimal power flow solutions, and the impact of UPFC on the spot pricing have been studied. The effectiveness of the proposed methods is demonstrated on a test system.