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So far, the issue on active power pricing has been preliminarily settled, but the research on reactive power pricing is still in its infancy. Studies in this field are mainly focused on three aspects: marginal reactive power pricing without considering reactive power producing cost, marginal reactive power pricing taking reactive power producing cost into account, and the reactive power pricing theory on non-marginal cost. However, there is still no consensus on how to calculate and compensate the value of reactive power ancillary service (RPAS), such as static VAR compensator (SVC) and so on. The thesis firstly introduces the domestic and foreign studies on compensating the value of RPAS. Then, it presents the mathematical model of SVC, and gives a brief account on the contributions made by installing SVC, such as increasing the active power transmission capacity of power line, restraining low- frequency oscillation and enhancing the transient stability of power system, and so on. Based on a power system model, the thesis puts its emphasis on analyzing the value compensation mechanism of reactive power ancillary service of static VAR Compensator. Finally, it points out that the mechanism can embody the essence of power market fairly well.