Reactive power pricing in competitive electric markets using the transmission losses function

Reactive power plays an important roll as an ancillary service in the new power system structures. Without an appropriate reactive power and voltage control the transfer of active power could not be done. The restructuring of the electric sector carried out in the last years in various countries gave rise to competitive markets of electric energy, giving main attention to the active power. Nevertheless, compared with it, the calculation of costs and prices for reactive power is not a clearly defined and solved matter. In this work a methodology to calculate prices based on the theory of marginal costs of active and reactive power and in techniques of decoupled optimization is presented. This one allows finding economical signals of active and reactive power at a nodal level, which may help to define pricing criteria of transport costs of reactive power and to detect responsibilities among transmitters and distributors in the generation-consumption of reactive power. For the decoupled optimization model the operation costs minimization and the transmission losses minimization were used as objective functions. In this work, the trend in dealing with the reactive power, the situation in the Argentinian market, the main methodological state and some results of applications on the Argentinian high voltage power system (SADI), are presented.