Electric Power Systems Research 82 (2012) 68–80 Contents lists available at SciVerse ScienceDirect Electric Power Systems Research jou rn al h om epa ge: www.elsevier.com/locate/epsr Probabilistic reactive power procurement in hybrid electricity markets with uncertain loads Amin Kargarian a,∗ , Mahdi Raoofat b , Mohammad Mohammadi b a Department of Electrical and Computer Engineering, Safashahr Branch, Islamic Azad University, Safashahr, Iran b Department of Power and Control Eng., School of Electrical and Computer Engineering, Shiraz University, Shiraz, Iran a r t i c l e i n f o Article history: Received 17 March 2011 Received in revised form 19 August 2011 Accepted 27 August 2011 Keywords: Hybrid electricity markets Local reactive power reserve Monte Carlo Simulation Multiobjective programming Probabilistic reactive power market System security a b s t r a c t This paper presents a novel probabilistic algorithm for optimal reactive power provision in hybrid elec- tricity markets. The proposed algorithm is a six-stage multiobjective nonlinear constrained optimization problem which takes into account load forecasting inaccuracies. Considering a set of probable forecasted loads, a three-component expected total market payment function is suggested being minimized as cost function of the first stage. Besides economic issues, expected voltage security margin, deviation from multilateral and pool based energy transactions, deviation from spinning reserve contracts, having ade- quate local reactive power reserve in each voltage control area of the system and transmission congestion probability are well thought out in stages 2–5 as technical aspects of the market. Finally, in the last stage, using different weighting factors to compromise between all objects, a probabilistic multiobjective func- tion is presented to find the best reactive power market schedule. The proposed algorithm is applied on IEEE 24-bus test system. As a benchmark, Monte Carlo Simulation method is utilized to simulate the market of given period of time to evaluate results of the proposed algorithm, and satisfactory results are achieved. © 2011 Elsevier B.V. All rights reserved. 1. Introduction In deregulated power systems, reactive power provision is one of the most important ancillary services which has a sig- nificant impact on power system security and reliability [1–5]. Almost in all electricity markets, Independent System Operator (ISO) is responsible for providing adequate reactive power for the market. There is not a unique approach for reactive power market clearing around the globe. Different methods are used in different electricity markets for reactive power procurement [6]. As main philosophy of the electricity markets, the system oper- ator tries to provide reactive power with the lowest possible cost. Also, because of important role of reactive power in network opera- tion and security, many researches have considered technical issues as well as economic issues. Different objective functions such as reactive power cost minimization, transmission loss minimization and system loadability maximization have been used in reactive power market settlement [7–10]. In power systems, transmission network is a key section which transfers electric power from generators to consumers. In most ∗ Corresponding author. Tel.: +98 711 917 3068366; fax: +98 711 2230549. E-mail addresses: amin.kargarian@gmail.com (A. Kargarian), raoofat@shirazu.ac.ir (M. Raoofat), m mohammadi@shirazu.ac.ir (M. Mohammadi). of power markets, transmission owners should be compensated for transferring electric power through the lines [1]. Several approaches have been proposed for transmission charge payment most of which depend on transmission lines power flow [1]. Reac- tive power schedule influences on power flow in transmission lines and consequently on transmission charge payment and also transmission energy loss. If the system operator schedules reactive power market without taking into account its effect on transmis- sion lines power flow, final schedule may increase transmission charge and transmission loss payment and consequently total market payment. Therefore, as the economic aspect of market, transmission charge and also transmission loss payments should be considered during market settlement in addition to reactive power provision cost. Furthermore, reactive power has a vital role in system voltage stability and security [2,9]. Insufficient reactive power is known to be one important reason for some major blackouts and voltage collapses around the world [2]. Hence, as a technical issue, if the system operator does not consider impact of reactive power on voltage stability, it may move the system toward voltage instability point. As it is explained in stage four of Section 3, considering only voltage security margin does not guarantee that voltage profile of all buses will be kept in acceptable range after any contingency and disturbance. Therefore, as another technical issue in reactive power market, sufficient reactive power reserve is necessary to prevent 0378-7796/$ – see front matter © 2011 Elsevier B.V. All rights reserved. doi:10.1016/j.epsr.2011.08.019