Toward a competitive market for reactive power

This paper presents the design of a competitive market for reactive power ancillary services. Generator-reactive power-capability characteristics are used to analyze the reactive power costs and subsequently construct a bidding framework. The reactive power market is settled on uniform price auction, using a compromise programming approach based on a modified optimal power-flow model. The paper examines market power issues in these markets and identifies locations where strategic market power advantages that need to be removed through investments in reactive power devices are present.