Reactive Power Market 2004 IEEE International Conference on Electric Uslity Deregulation, Restuctring and Power Technologies (DRPT2004) Api 2004 Hong Kong Based on Consolidated Compensation Piao-hong Kong, Jun-yong Liu, Lei-lei Pan and Yuan Huang, Absract-A deregulated electricity market demands competiive reactive power auxiliary service, soit is rocereay to determine the values of reactive power supports from different reactive power sources, according to these values the reactive power ausliary services ean be price Here; the concept of effective reative power capacity is first pt forward, and the model of reactive power market i blshed onthe basis of global optimal compensation, thus, ‘market is divided into two markets, Le, ‘andthe electricity ‘alus of reactive power supports should be determined cording tthe cotributon tothe stability and security Gf power sytem revpecivey. The ‘errectecss of he Presented method ts proved by the resalof sensitivity Snags Taking the TEEE-J0 bus system and Sichuan power {rid for example the simulation andthe calculation forthe reactive power pricing 1, Ismopucrion Rete vores supvet lye an important rote in maintenance system security and stability. Mis realized that establishing accurate prices of reactive power support can not only recover the eost of reactive power production, but aso provide useful information related to the urgency of reactive power supply and system voltage support {1]-[2} Fist, correct price signals will facilitate ‘ansmission access and improve economic efficiency. With the proper costing and pricing of reactive power, transmission users will have the ability to make intelligent decisions about economic activities such as energy transactions, investments, and asset utilization, Second, the efficiency and reliability of system operation will be improved when well-balanced reactive power resources are available to support the transmission network since active power losses in the transmission system will be reduced by properly distributing reactive power ‘generators. Last, voltage profiles will be improved whieh, in tur, will reduce the incidents caused by high and low voltage problems. Therefore analyzing) the cost of providing reactive power services and establishing an appropriate price structure are important both financially and operationally for the deregulated electric industry. 0-7803-6237-404/817 006 2004BEE. oo However duc to the characteristics of reactive power, is cost computing i difficult Unfortunately, the pricing of reactive power has received very litle attention. A reason for this negligence is the inherent difficulty in understanding the concept, especially by economists. Berg, et.al. [3] point out the Inconsistency und inadequacy of the present. pricing policies based on power factor penalties, They suggest that, given the present high cost of additional investments by ‘electric ulltes, price should be derived from ‘economic principles, which support a pricing approach ‘that has price equal marginal cost, and would also reflect today’s technological constraints. Inthe present papers the most significant works dealing with reactive power pricing can be grouped into three categories: (© Proposals for the determination of the Marginal Price (MP) of reactive power services neglecting the production cost [2){4}15]: © Proposeis for the determination of the cost and the (MP of rective power services [6}(9]; © Proposels that are not based on the marginal cost theory [1}.[10} So fur the pupers of group one and two have dealt with studies based on the marginal cost theory, that is based on the supposition that murginal cost more or less can recover all cost involved in producing, transporting. and delivering reactive power. These papers have not ‘considered yet an unbundled electric market but they have only proposed a fairer method for calculating the reactive power price (MP) alternative to the traditional one, based fn power factor penalties, which does not give signals on how the reactive power cost are varying depending on customers’ consumptions. In fact the marginal cost, regarded as the sensitivity of the generation production cost to the reactive power demand, represents smal portion of the true cost, as only the fuel cost of the generators is included, This paper proposes a new concept of equivalent reactive power capability (ERC) and & reactive power market structure based on consolidated compensation, Such a reactive power market is divided into to markets, ie. the reactive power capacity market and the electricity quantity market of reactive power market (7){8]. The CROPF method is used to solve problem of optimal ‘reactive power espacity and quantity purchasing The rest of the peper is organized as follows: a description and formulation of the consolidatedE Iteration Conference on Elect Uliy Derepultion, Rest ‘compensation based reactive power market is given inthe next section, The case studies in section Il, performed on the 30-bus IEEE standard system and the power system of Sichuan province. Finally, a discussion with concluding remarks is given in section IV, while section V ists the relevant references 1, CONSOLIDATED COMPENSATION BASED REACTIVE POWER MARKET In this paper, reactive power market based on consolidated compensation is considered, where there is & ‘need for procedures to incentive the participants in the market fo provide reactive power services and ensure an adequate payment that guarantees the economic feasibility of this business. Cost of providing reactive power support has two components: © capital cost associated with the provision of reactive capacity © quantity and maintenance cost related to the reactive ower output within his capacity ‘Therefore the reactive power market is decomposed t0 0. sub-matkes based and a quantity based market, the reactive ower sources are reasonably distributed, thus not only the distribution and capability of reactive power sources but also their investment cast are taken into account. In quantity based market, the implicit cost of reactive power sources is analyzed and their outputs are rearranged according to system reactive power requirement. AS & result, the tolal faultenduring ability of system is improved, A. The Reactive Power Capacity Market It is necessary for system to have sufficient reactive power reserve, ensuring that voltages throughout the system ate maintained under both normal and emergency conditions to prevent Joss of loads and keep system reliability at acceptable levels, The market would be based on long-term capacity bids provided by generators and other control elements to the System Operators to ensure system voltage security. For selected bids there is a long-term obligation for voltage regulation in their connection buses. The control elements will ecsive a capacity payment for this service. The total equipment remuneration should be proportional to the impact of the equipment on the expected non-supplied energy, and it should take into account the amount ofthe reactive power capacity provided and its type of control (time constant of the AVR response, integration in a secondary voltage control loop, ele.). So their investment cost can be compensated and more investors have incentives to anticipate the construction of reactive power market Reactive power capacity cost is valued based on theit ‘contribution to system security and voltage reliability First of all, the equivalent reactive power capability should be determined. For valuation of souree’s reactive sai srscturng and Power Technolgies (ORPT200) April 2004 Hong Kong power to system security and voltage reliability, many ‘methods are available. The most promising ones are followings: Voltage Sensitivity (VS), PV eurves, Back-up generation and Equivalent Reactive Compensation ‘methods [11]. Voltage Sensitivity method can not only rank the system sources according 10 reactive power supply capabilities, but also solve the problem: What does 1 MVar from one or other source do 1 system losses? PV ceurves method is performed to answer what does 1 MVar ‘mean to transfer capacity? To evaluate generator's reactive power support capabilities, Back-up generation method can be tried. The main’ idea of Equivalent Reactive Compensation method is as follows: ifa reactive power source changes its output, the neswork voltage profile and stability levels will change. To maintain the same degree of network secutty, reactive power ‘compensations can be added (at all load buses). The total amount of fictitious compensation added is a direct ‘measure ofthe value of the missing reactive power ousput fiom the source. In this paper, we use Voltage Sensitivity ‘method. Voliae Sensitivity show the effect an additional injection of real or reactive power at 8 bus on real, reactive, or complex power flow on a particular line of interface. Power losses sensitivities to active and active power can been calculated by the means of voltage sensitivities. Matheratically itis Hi, 08 hoe 7 o a 66 PO aP an, a @ dq” 35 00° 80 where Py is the lose of the whole system; P and Q are active and reactive power ofthe loads; V and & are nodal voluge and nodal angle. which can be expressed by wm) [ae vt ]an, w |, [ar oy | as © ar, |") 26 ov 1 | ae, % , dQ 80 OF Na In this paper, we only concer about the reactive power losses sensitivity, so the first term in the matrix is neglected OLS, ore re « a = F8cr 0 My = Maggy Me Monat Sy, © where N; isthe set of nodes with reactive power sources; OLS is reactive power losses sensitivity of reactive power source i; PLS, is active power losses sensitivity of reactive Power source i; 5, isthe relative contribution factor ofreactive power source i; Muay is the total capacity payment; M; is the capacity payment of reactive power source i. Fig. | represents the flow chart for computing reactive power capacity payment, je —frasnion vata pove on] Power ow Seaviy am f—f [Decenination Ps and O15] ‘Cag var source ily ave oan le hk Fig Flow chat of eacive power bling The Elecricty Quantity Market Of Reactive Power The reactive quantity market would be also based on long-term bids provided by generators and other control clements to the System Operators. The bid format includes the margin of the reactive power variation (generation and absorption ) and the loss-curve,, which relates the intemal equipment losses to the reactive power, produced or absorbed by the control element. Both ‘generator injections and reactive power demands shall be remunerated or charged through multiplying the reactive power quantity by the corresponding losses minimization spot pric. 1) Reactive Power Quantity Cost Reactive power is produced or absorbed by all major ‘components of a power system such as: generators, power transfer components; loads; resctive power compensation evices. In this paper. only generators, shunt capacitors and shunt reactors are considered, Flectric power generators are installed to supply active power. Additionally a generator is supporting the volage, producing reactive power when overexcited and absorbing reactive power when underexcited. The reactive power output of « generator will rue is ative Power generation capability, which can serve at least as spinning reserve, and tbe corresponding implicit financial loss to generator is modeled as an opportunity cost [5,8 Actually it is dificult to determine the real value of i ‘esoirng he paseo = varsoures ot J B opportunity os. For” simpliciy, we consider i spproinatly az tO) “MC pS) Cpa care) o where Scum is the nominal apparent power of the generator kis the profit rate of active power generation; Cyo() is the active power production cost of generator i, 542 2004 IEEE International Confrence on Electric Uliy Deregulation, Restructuring and Power Technologies (DRPT2004) April 2004 Hong Kong Cay) is the reactive power production cost of generator ji ‘There is an opportunity cost no matter it generation oF absonption ‘As for the equivalent production cost for capital investment retum of capacitors, which is expressed as depreciate rate (Ihe life-span of eapacitors is 15 years ): 1.0, = 310! Mer cia = G5e365=24iyh = 513.240, (100 Vari Where h represents the average usage rate of eapacitors taken as 2/3. Quis in per unit on 100 MVA bse. 2) Mathematical Model Reactive power has quantity cost curve similar to ative power, the curve is non-linear and can be linearized. As seen ffom the previous section, there is cost for providing the reactive support from various sources. This cost should be covered by the users of the power system. The rminimization of total cost, thus, was chosen 10 be the ‘objective function. Its mathematical form is: LegCghQy Cosrom generators ® Min Z&CCAQe Ct fromcompetn +E pC ATap, Cos frm renstrmers $C, a, 0) ost of tse ‘The objective Function is subject tothe following set of. Gpmin 9p +40¢ $ Sgmax co) Ypmin D0 +4¥p £¥pmax ay I gnin $8 $8 rr) 05 AQ. < Comax a Ae gig §ATOP § AT ran an Equations 10 and 11 respectively represent the ‘operating limits for generator and load buses. Equations 12 to 14 represent the range ofthe control variable. Fig.2 represents the Now chart for computing reactive power quantity of electricity | rover liow Sato] pial oe — (RemgsmenoTonna I Tinorenanat Sapa deamee been op and noon] Fig. 2, Flow cat of eacive power que of eetcty