Cost-based reactive power management

Reactive power plays an important role in supporting the real power transfer. However, compared with real power, the idea of reactive power costing and pricing is still not extensively applied. Previous objective functions for determining reactive power requirements mainly focused oil the loss minimization. In this paper, a cost-based objective function is presented, which takes into consideration the cost of reactive power and voltage support. This cost consists of the cost to buy it from reactive power markets, compensator switching costs, transformer tap changing costs and the transmission loss costs. The cost minimization determines the resultant reactive support profile and the cost from generation sources is further allocated to each transactions. This cost-based reactive power management considers the behaviors of reactive providers, the transmission system and the independent system operator, It provides the information oil the costing and pricing of reactive power.