Reactive power market mechanism for pricing

Abstract

The present master thesis addresses reactive power management, a crucial factor for the stability and effectiveness of power systems. Correct valuation and pricing of reactive power are important for efficient operation of power networks. In this contribution, we introduce a novel reactive power pricing mechanism, which we expect to be more realistic and reliable in contrast to existing approaches, and at the same time serve as a basis for future optimization approaches. The proof of concept of the proposed pricing algorithm is accomplished by implementation of Python-based simulator via PyPSA, which is a useful tool for network theory and optimization. The algorithm will help to compute reactive power price per unit at each bus, and total cost involved of reactive power in the power network.

As a case study, IEEE 30 and 33 Standard Bus system have been used. The simulation results show that the proposed price mechanism reflects the real situation in the environment and is suitable for comparison with the existing methods. Subsequently, the Power Flow (PF) analysis is executed, and results from the simulation are analyzed with and without reactive power market. To show reasons for higher prices at each bus and providing a solution to tackle those problems by realistic and reliable approach compared to existing methods.

With proper reactive power pricing mechanism, it can lead to reliable voltage stability, lower system loss operation of the power network. It is the combination of technicaleconomic operational reality, transparency and fairness that makes such a reactive power market an ideal market design for managing reactive power in modern and future power systems. This thesis adds to the literature by creating a methodological framework for proper price design of reactive power, which results in further study and practical implementation of such a market in the real power system.