The Study Of Reactive Power Pricing In Electricity Market

How to price reactive power service is getting more and more important with the fast development of electricity markets. However, as the research has not received significant attention until recently, the theory on it is still not well defined. The paper presents the preliminary analysis and research about the reactive power costing and pricing in the electricity markets.The paper first concludes electricity markets, and introduces the study situation in the reactive power pricing.The paper then discusses the reactive power service, its procurement, the possibility of a competitive reactive power market and its production cost, and proposes a new generator's reactive bid structure.The paper reviews and summarizes the reactive power pricing structures inside and outside the country. A new method of reactive power pricing is proposed based on marginal cost method and embedded cost method. The method can make both ends meet and provide reasonable economic signals to the participating agents, and it is suitable for electricity pool.Examples with a 5-bus system and the 14-bus IEEE standard system is given to show the process of the method proposed in the paper. The simulation results demonstrate the accuracy and the validity of the proposed method.