VALUE OF VAR SUPPORT IN A COMPETITIVE ENVIRONMENT Danny Pudjianto, Goran Strbac S Ahmed, Keith Bell Peter Turner UMIST National Grid Powergen United Kingdom Abstract – This paper presents a method for allocation and evaluation of reactive power (VAr) support contracts necessary to maintain system security and quality of supply. The method also quantifies the value of VAr support from individual generators or a portfolio of generators. Such information may be useful both to generating companies in preparing VAr tenders and to the market operator in assessing the value of VAr support tenders. For this purpose a novel sensitivity analysis based security constrained OPF (SA-SCOPF) is described that caries out the evaluation of VAr support offered from various generators across several demand levels taking into account a number of contingent systems. Case studies are presented to demonstrate the performance of the developed solution scheme of the SA-SCOPF on the England and Wales 1092 bus network. Keywords: reactive power market, value of reactive support, system security, optimal power flow 1. INTRODUCTION The function of transmission in a power system is centred on the fundamental requirements of providing efficient transport of electrical energy from large generators to demand centres, while maintaining required standards of security and quality of supply. Among other requirements, these standards specify the permitted voltage fluctuations under both normal and contingent conditions. In order to efficiently maintain the required level of voltage regulation, an adequate management of reactive power is essential. There will be a need for a margin of reactive reserve to be held on a number of generators and other dynamic reactive compensation plant. These reactive reserves are maintained primarily to provide additional reactive power in the event of outages. For instance, with the loss of a transmission circuit, the network configuration changes resulting in an increase in system impedance, which in turn increases reactive demand. This increase is supplied from reactive reserves. System operation must therefore, ensure that sufficient reactive reserve is held for all credible contingencies. Due to localised requirement of reactive support, these reserves must be appropriately distributed across the network. Since privatisation of the electricity supply industry in England and Wales, a ‘Grid Code’ has applied specifying, among other things, a minimum requirement for generators’ reactive power capabilities [1]. In order to enable generators to offer and be rewarded for enhanced reactive power services, since early 1998, twice a year the National Grid Company (NGC), owner and operator of the England and Wales transmission system, has sought ‘reactive market’ tenders from generators. In this market, generators can offer bids composed of capacity and utilisation elements [2]. The capacity bid takes the form of the total amount of MVAr offered with a price per MVAr, while the utilisation bid specifies the MVArh price curve. Bilateral contracts are awarded for successful tenders and payments are made for both capability and utilisation of reactive power based on the accepted bids. Generators that do not submit bids are nevertheless required by the Grid Code to provide reactive power but receive a default payment based on a predefined value of per unit reactive energy. The process for selection of bids takes into account the location of generators, various network configurations and the costs of competitive options. Generating companies that provide VAr support and the network operator responsible for buying it are interested in understanding the value of the services offered. Such understanding requires the availability of network data, demand and generation profile data and reports on past activity in the market. This information is provided by National Grid in England and Wales in the annual ‘SYS’ (Seven Year Statement) and on the internet [3,4]. This paper describes a new sensitivity analysis based security constrained optimal power flow (SA-SCOPF) developed to calculate the optimal amount of VAr support that needs to be committed while fully exploiting the available control capabilities of the system. The optimal portfolio of reactive contracts to be accepted should be adequate to maintain system security and quality of supply across a number of loading conditions while taking credible contingencies into account. The SA-SCOPF adopts two optimisation stages to solve the problem. The first stage is called the ‘decision making’ sub-problem and the second stage is the ‘decision evaluation’ sub-problem. A similar problem has been tackled in [5] by using a Benders decomposition technique. However, the standard Benders scheme suffers from a poor convergence rate when the number of control variables to be optimised is very large [6-8]. Case studies are presented based on the published England and Wales 1092 bus system [3] to demonstrate the validity of the developed SA-SCOPF. 14th PSCC, Sevilla, 24-28 June 2002 Session 40, Paper 5, Page 1