Remuneration and charging procedures for competitive procurement of reactive power capacity

This paper presents a comprehensive design for reactive power markets. Under this approach, the system operator purchases the required reactive power capacity for generation and absorption from the reactive power market agents. To introduce competition in the proposed market different agents are able to participate in the annual auction, such as generators, capacitor banks, shunt reactors, SVCs or STATCOM devices. The optimal purchase of the required capacity is performed using an optimization algorithm that minimizes the costs associated with the voltage control service. The reactive power requirements in the power system are calculated taking into account different operation scenarios, which include critical system contingencies. A key proposal of the paper is the distribution of the remuneration and charges among the participating agents. The proposed scheme guarantees the efficient economic signals to all market participants. The applicability of this approach is illustrated with a 39 buses case study.