VALUATION OF REACTIVE POWER ZONAL CAPACITY PAYMENTS

Abstract – This paper presents a new approach to design long-term zonal reactive power capacity markets. Under this approach, in each voltage control area, an annual auction to procure reactive power capacity is conducted by the System Operator. A key contribution of the paper is the method to compute the zonal demand curve using the marginal utility function. This function is calculated as the variation of the expected operation costs when the reactive power capacity in the area is increased. The applicability of the approach is illustrated in a case study with one voltage control area