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Cost based Reactive Power Pricing Structure in Restructured Environment

In the new deregulated and restructured electric utility industry, generation, transmission and distribution have become different entities. It is therefore necessary to separate costs of active and reactive powers for sustained development of industry. In this paper, a cost based reactive power pricing structure for a generator under deregulated conditions is presented. Various factors affecting valuation or costing of reactive power support from generators are analyzed. A mathematical model for reactive power pricing structure based on various cost components is developed for typical turbo generators. Effect of different price bids for active power is analyzed on reactive power pricing. Comparison of old and new generators as well as different capability generators is done with respect reactive power pricing. Simulation is carried out on 5 bus system considering these typical generators as part of the system.