Multiple indices for optimal reactive power pricing and control

An integrated approach for reactive power price and control is developed. Reactive power price is divided into fixed and variable parts. The fixed part is the operational cost of reactive power service. The variable part of reactive power price is determined based on capability and contributions to the improvement of system performance such as security, reliability and economics. These contributions can be evaluated by computing sensitivity of objective function with respect to reactive power support. The optimal power flow (OPF) approach is used to carry out this purpose. For VAr planning (or control) purposes, three parallel indices are first presented to determine the sites of new VAr sources. They are benefit-to-cost ratio index, voltage reactive sensitivity index, and the bus voltage security index. The analytic hierarchical process is then used to comprehensively consider the effect of the three indices and the network topology for each candidate VAr source site. The proposed approach was tested on an IEEE 30-bus system with satisfactory results.