Cost analysis of reactive power support

The transfer of real power cannot be realized without reactive power/voltage support. However, compared with real power, the idea of reactive power costing and pricing is still not well defined. In this paper, the economic cost of reactive power is first analyzed. This cost includes the explicit and opportunity cost from various generation sources, such as generators, and the explicit cost from various transmission sources, such as reactive compensators, tap-changing transformers and the cost of transmission losses. Different from previous objectives functions, in this paper a cost-based reactive power dispatch is presented, which minimizes the total cost of reactive power support and determines the resultant reactive profile. This cost-based reactive power dispatch methodology provides information on the costing of reactive power and the information may be further expanded to include the pricing of reactive power.