| After deregulation of electricity markets, supply of ancillary services such as reactive power supply has to be priced separately. While the power industry is undergoing a large scale reform, the formation of a viable and acceptable reactive power market structure is currently being discussed and researched widely.;This thesis proposes a reactive power market settlement scheme considering the effect of the system voltage stability margin. In this thesis, the elements that participate in the generation and transfer of reactive power are analyzed and priced for their services. The measurement of voltage stability margin (VSM) is represented by a set of least singular value of system Jacobian. The results show that the reactive power market settlement considering the system voltage stability margin gives a higher price for reactive power than without considering it.;It is common knowledge that the various aspects of reactive power such as generation, transmission and supply are inextricably linked to the system voltage stability margin. However, little or no study has been undertaken to reckon the effect of increasing or decreasing the system voltage stability margin on reactive power prices in a power system. |
