A distributor´s view of reactive power

In the UK, each Regional Electricity Company holds a Public Electricity Licence for electricity supply and distribution within the franchise area, but under revised Licence conditions, OFFER require a clearer separation of responsibility between the supply and distribution businesses. Under the commercial agreements which are being developed for full competition in supply, the distributor and supplier may have differing perspectives on the value of reactive power. It is important that the market incentives for trading reactive power are fully-consistent with the responsibilities placed upon all parties to ensure that power system stability and losses are correctly managed. This point is developed further in this paper. The demands of customers for reactive power, and the inherent kVAr requirements of the distribution system, impact upon the economic design and operations of the network, especially in limiting real power delivery due to current rating of plant, and enhanced volt drop per kW distributed. The distributor´s view of reactive power may be divided into three parts which can be addressed separately: the requirements of the end-customer and cost-reflective pricing; the design and operation of the distribution network; and the reflected impact of reactive power costs and risks as seen in transmission charges to the Licence-holder