| The issues of reactive power optimization, reactive power services costing and pricing are of great significance. Especially, it is closely related to the security and stability of power market operation. However, as the research on it has not received significant attention until recently, the theory on it is still not well defined This thesis presents the preliminary analysis and research about the reactive power costing andpricing in the power market environment.The main contributions of the thesis as follow: At first, the thesis systematically reviews and summarizes of reactive power service and the reactive power pricing inside and outside the country;The second, in view of the electricity generation market, a new method to draw up the two-part tariff for reactive power is proposed. Taking the power flow equation as the equality constraint and the operation and security constraints as the inequality constraints, the optimal reactive power cost is the objective function in the proposed model. The main idea of the proposed reactive power model is as following: on the one hand in electricity market environment the reactive power source participates the competition by its cost to solve the deficient compensation of reactive power operation cost under existing one-part electricity pricing mode, on the other hand a new capacity price decomposition scheme for reactive power is put forward to solve unstructured problem of cost recovery for reactive power investment in existing one-part electricity pricing mode. Thus a new two-step reactive power pricing model that consists of energy price and capability price is formed. On the base of this, the thesis proposes a new analyses methods and arithmetic about the costing of compensated services and the pricing of electric power.At last, a software is programmed to calculate the costs of compensated reactive power electricity price. The results gained by making examination on die 5 and IEEE 14 systems are satisfactory.
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