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A new method is described which determines the optimum number, location, and size of shunt capacitors in a radial distribution feeder with discrete lumped loads so as to maximize overall savings, including the cost of capacitors. The method also determines when capacitors are not economically justified. Dynamic programming techniques are used and several algorithms developed to obtain the optimal solution by regarding the optimization process as a multistage decision process with the desired Markovian property. Special cases are studied and solutions obtained when no capacitor cost, cost proportional to installed capacity, and cost proportional to installed capacity plus a fixed cost per installed bank are considered. The methods are suitable for efficient solution in a digital computer.
Hernando Dura (1968) studied this question.