An Integrated Competitive-Approach for the Remuneration of VAR Producers in an Open-Access Environment

Abstract

This paper proposes a comprehensive competitive-based scheme for procuring VAR ancillary services from the dynamic sources in an open-access environment. To make an incentive for the market participants, the proposed pricing mechanism includes VAR capacity as well as VAR utilization during system operation. In order to accommodate real power system circumstances and evaluate realistically expected total VAR capacity and utilization payment during the contracted period, multiple load levels and the associated critical contingencies for each load level with their occurrence probabilities are addressed. The problem is stated as a large-scale minimization problem so that the financial and technical issues, emphasizing voltage security issue, are regarded explicitly in a new unified single formulation. The proposed formulation stresses the fairly payment in terms of the VAR capacity and VAR utilization for the worthy VAR providers that are critical for keeping system security under multiple transition states. The method has been tested on IEEE-57 bus system to examine its capability.