Real-time pricing of reactive power: theory and case study results

An analysis is made of real-time pricing policies of reactive power using a modification of the OPF (optimal power flow) model. The theory of real-time pricing of reactive power is presented, followed by a case study illustrating the magnitudes and ranges that real-time prices of reactive power might take on under different circumstances. The efficiency implications of real-time pricing of reactive power are compared with traditional power factor penalties. It is concluded that real-time pricing of reactive power should develop simultaneously with that of active power for maximum economic efficiency and smooth operation of the electricity marketplace