A proposal for reactive power pricing for gencos

Abstract

Reactive power management and pricing has become one of the major issues in power sector. It is expected that generation, transmission and distribution systems should each be self sufficient for the need of reactive power. In this work, an attempt is made to analyze reactive power support and various factors affecting costs of reactive power provided by synchronous generators. A single mathematical equation giving relationship between reactive power and its price is found to be a sixth order polynomial. Further it is proposed that the use of old and less efficient generators available at different power stations may be used to fulfil reactive power requirement. This proposal is tested for a typical 5 bus system using MATLAB and POWERWORLD simulator software. It is shown that new and efficient generators can operate at a higher power factor than their operating power factor thereby providing additional active power needs. Generating companies can also earn significant revenue for providing reactive power support. Further analysis shows that capability limits of synchronous generators have direct impact on pricing of reactive power support.