Reactive Power Management In Deregulated Electricity Markets

Electricity markets move from monopolistic structure to deregulated structure in which reactive power management is considered as one of the several ancillary services to improve the performance of the system. To prevent voltage collapse, sufficient reactive power supply is essential. In competitive power industry, separate pricing scheme for ancillary services like reactive power is required to ensure healthy market operation. Federal Energy Regulatory Commission (FERC) states that, transmission providers must include reactive power in open access transmission tariff. Generation and transmission of reactive power cause energy losses which lead to cost. These costs have to be accounted while providing reactive power for the consumers. Independent System Operator (ISO) plays a major role in deregulated electricity market with respect to reactive power management. Procurement, scheduling and payment of reactive power are the three main functions to be carried out by ISO for reliable and secured operation of power system. The ISO has to develop market structure for procuring reactive power from generators and allocating optimized cost for such supply