Optimal real time pricing of real and reactive powers

This paper presents a theory and simulation results of real time pricing of real and reactive powers that maximizes social benefit. Conventional studies represented the responses of consumers as demand functions, and the objective of optimization was minimization of operating cost of power system. In this paper, the responses of consumers are represented as the inverse of the demand functions and power flow equations are incorporated in the constraints. This makes it possible to incorporate constant power factor demand consumer as a participant. That also makes it possible to maximize the objective function of optimization that is social benefit of participating in the electricity market and to determine the price of electricity at each bus. Not only the real time price of real power but also that of reactive power is determined simultaneously by the incorporation of power factor of loads into the constraint of optimization.