Application of a nonlinear reactive power pricing model for competitive electric markets

A methodology for calculating active and reactive power marginal prices is proposed. Attention is given to the reactive power marginal price in a competitive electric market. The formulation adopts a synchronous generators steady-state model with nonlinear reactive power limits. Total cost of reactive power production (CRPP) is represented as a nonlinear model that considers the corresponding economic loss if active power is not generated; that cost is the opportunity cost. The formulation includes the CRPP of the static compensators. The methodology has been implemented using a modified optimal power flow program that includes a sequential linear programming technique enhanced with a modified predictor-corrector interior-point method. The IEEE-30, -57, -118 systems and a reduced configuration of the interconnected (South-Southeast) Brazilian system have been used for application of the methodology. Results demonstrate that the active and reactive power marginal prices give economical signals that could impel even more the participation of agents of competitive reactive power markets.