Coupled energy and reactive power market clearing considering power system security

In a deregulated environment, when talking about electricity markets, one usually refers to energy market, paying less attention to the reactive power market. Active and reactive powers are, however, coupled through the AC power flow equations and branch loading limits as well as the synchronous generators capability curves. However, the sequential approach for energy and reactive power markets cannot present the optimal solution due to the interactions between these markets. For instance, clearing of the reactive power market can change active power dispatch (e.g. due to a change of transmission system losses and the capability curve limitation), which can lead to degradation of the energy market clearing point. This paper presents a coupled day ahead energy and reactive power market based on the pay-at-MCP settlement mechanism. Besides, the proposed coupled framework considers voltage stability and security issues and branch loading limits. The coupled market is cleared through optimal power flow (OPF). Its objective function includes total payment of generating units for their active power production along with the total payment function (TPF) of units for their reactive power compensation. Moreover, lost opportunity cost (LOC) of the units is also considered. The effectiveness of the proposed framework is examined on the IEEE 24 bus Reliability Test System.