Pricing of reactive support ancillary services

Good reactive power management is essential for the secure operation of power systems. In a deregulated power market environment, apart from technical complexities, economic considerations of compensating reactive power suppliers and charging transmission users add new challenges to the problem. The problem of pricing reactive ancillary services is addressed. It is formulated as a joint cost allocation problem. The total reactive support costs are determined to be the increase in real generation costs from the reactive unconstrained case (base case) to the case in which voltage security constraints are considered. The incurred costs are allocated to consumers with the application of the Aumann-Shapley method. The results of the simulation of the proposed methodology are demonstrated on an eight-bus system.