Reactive power as an ancillary service

This paper addresses the problem of reactive power procurement by an indepe ndent system operator (ISO) in deregulated electricity markets. A reactive bid structure is proposed in the context of a reactive power market. Based on the reactive power price offers and technical constraints involved in re active power planning, a two-tier approach is developed to determine the mo st beneficial reactive power contracts for the ISO, The reactive capability of a generator and therefore the opportunity costs in providing reactive p ower is also included in the model. Uncertainty in reactive demand and in r eactive bids of participating parties is incorporated through Monte Carte s imulations and the expected reactive power procurement plan for the ISO is hence determined, The CIGRE 32-bus network, approximately representing the Swedish system, is used for the studies.