Procurement Market for Reactive Power Reserve Considering Coupling of Energy with Reactive Power

Reactive power support is one of the most importance ancillary services for power systems. System operators should procure sufficient reactive power services to guarantee the voltage security. Adequate reactive power reserve is necessary for maintaining the voltage stability after disturbances. Considering reactive power reserve as commodities, this paper proposes a two-step procurement market for reactive power reserve. First, energy prices along with settlement are obtained through the energy-only market. Then based on the pay-as-bid (PAB) mechanism, overall payments are minimized considering the cost of lost opportunity of reactive power reserve which is coupled with the energy prices. Case studies of IEEE 24-bus system show fair payments for reactive power reserve are necessary to incentive providers and ensure sufficient reserve especially when the demand for reserve is large.