Analysis of reactive power pricing under deregulation

Developing an accurate and feasible method for reactive power pricing is important in the electricity market. Such a reactive power price cannot be obtained by conventional optimal power flow models because the production cost of reactive power is ignored in these models. In this paper, the authors include the production cost of reactive power into the objective function of the OPF problem, and use a sequential quadratic programming method to solve the optimal problem. A 5-bus test system is used for simulation. The results from several study cases show clearly the effects of various factors on reactive power marginal price.