Two-stage optimization algorithm for short-term reactive power planning based on zonal approach

There are various methods for procurement of reactive power as an ancillary service in deregulated market environment. Reactive power market model based on voltage control zones and two-step optimal power flow algorithm is proposed in this paper. Zones are formed by splitting the power system or a control area of an interconnected power system into autonomous voltage sub-areas with sufficient reactive power reserves using the electrical distance method. Every zone formes a single reactive power market. First step of an optimization algorithm determines zonal reactive power prices based on generator's cost functions for reactive power production. Total cost minimization is the goal of the second optimization step where the final dispatching decision is made according to transmission losses and zonal reactive power prices respecting power system planned conditions and security constraints. Proposed algorithm is tested on IEEE 39 bus test system ensuring the system operator's minimal payment for reactive power and transmission losses, without jeopardizing power system security.