Logo
ScienceStack
Table of Contents
Fetching ...
Sign In

A Reactive Power Market for the Future Grid

Adam Potter, Rabab Haider, Giulio Ferro, Michela Robba, Anuradha M. Annaswamy

TL;DR

This work addresses reactive power support in decarbonizing grids by proposing a distribution-level market that prices reactive power using a $CI$-OPF-based framework with a PAC-based distributed optimization. By enabling inverter-based DERs to participate with variable, location- and time-specific payments, the approach yields stable daily $d\text{-}LMP$ signals while supporting high DG penetration (up to $160\%$ of peak loads) and allowing PF flexibility from $0.6$ to $1.0$. The numerical study on a modified IEEE-123 bus demonstrates that DGs can cover substantial reactive power needs (over 40% in certain PF ranges) and earn meaningful reactive revenue (up to about 11% of total DG revenue), with improved voltage profiles and controlled price volatility. The results suggest a practical path to integrating DERs into reactive power management, improve grid efficiency, and guide investments, though real-world regulatory and cybersecurity considerations remain for deployment.

Abstract

As pressures to decarbonize the electricity grid increase, the grid edge is witnessing a rapid adoption of distributed and renewable generation. As a result, traditional methods for reactive power management and compensation may become ineffective. Current state of art for reactive power compensation, which rely primarily on capacity payments, exclude distributed generation (DG). We propose an alternative: a reactive power market at the distribution level designed to meet the needs of decentralized and decarbonized grids. The proposed market uses variable payments to compensate DGs equipped with smart inverters, at an increased spatial and temporal granularity, through a distribution-level Locational Marginal Price (d-LMP). We validate our proposed market with a case study of the US New England grid on a modified IEEE-123 bus, while varying DG penetration from 5% to 160%. Results show that our market can accommodate such a large penetration, with stable reactive power revenue streams. The market can leverage the considerable flexibility afforded by inverter-based resources to meet over 40% of reactive power load when operating in a power factor range of 0.6 to 1.0. DGs participating in the market can earn up to 11% of their total revenue from reactive power payments. Finally, the corresponding daily d-LMPs determined from the proposed market were observed to exhibit limited volatility.

A Reactive Power Market for the Future Grid

TL;DR

This work addresses reactive power support in decarbonizing grids by proposing a distribution-level market that prices reactive power using a -OPF-based framework with a PAC-based distributed optimization. By enabling inverter-based DERs to participate with variable, location- and time-specific payments, the approach yields stable daily signals while supporting high DG penetration (up to of peak loads) and allowing PF flexibility from to . The numerical study on a modified IEEE-123 bus demonstrates that DGs can cover substantial reactive power needs (over 40% in certain PF ranges) and earn meaningful reactive revenue (up to about 11% of total DG revenue), with improved voltage profiles and controlled price volatility. The results suggest a practical path to integrating DERs into reactive power management, improve grid efficiency, and guide investments, though real-world regulatory and cybersecurity considerations remain for deployment.

Abstract

As pressures to decarbonize the electricity grid increase, the grid edge is witnessing a rapid adoption of distributed and renewable generation. As a result, traditional methods for reactive power management and compensation may become ineffective. Current state of art for reactive power compensation, which rely primarily on capacity payments, exclude distributed generation (DG). We propose an alternative: a reactive power market at the distribution level designed to meet the needs of decentralized and decarbonized grids. The proposed market uses variable payments to compensate DGs equipped with smart inverters, at an increased spatial and temporal granularity, through a distribution-level Locational Marginal Price (d-LMP). We validate our proposed market with a case study of the US New England grid on a modified IEEE-123 bus, while varying DG penetration from 5% to 160%. Results show that our market can accommodate such a large penetration, with stable reactive power revenue streams. The market can leverage the considerable flexibility afforded by inverter-based resources to meet over 40% of reactive power load when operating in a power factor range of 0.6 to 1.0. DGs participating in the market can earn up to 11% of their total revenue from reactive power payments. Finally, the corresponding daily d-LMPs determined from the proposed market were observed to exhibit limited volatility.

Paper Structure

This paper contains 27 sections, 2 theorems, 32 equations, 9 figures, 3 tables.

Table of Contents

  1. Introduction
  2. State of Art of Reactive Power Compensation
  3. History of reactive power pricing in the US
  4. Implementation practices for reactive power pricing
  5. Technical Solutions for Reactive-power Pricing
  6. Reactive power needs of the emerging grid
  7. Reactive Power Pricing
  8. Introduction to Current Injection Model
  9. Problem Formulation
  10. Distributed Market Mechanism
  11. Decomposition of CI-OPF
  12. Statement of the Algorithm
  13. Privacy of the Algorithm
  14. Reactive Power Pricing
  15. Reactive price volatility
  16. ...and 12 more sections

Key Result

Theorem 3.1

Let ${a} \left[\tau\right] = \left[{a}_{{1}}\left[\tau\right]; \cdots; {a}_{{K}}\left[\tau\right]\right]$ represent the PAC trajectory of eq:PAC. Define the following quantities: Then if the following assumptions hold Then there exists an optimal solution ${a}^{\ast}$ s.t.: with convergence rate satisfying, for all $\tau \in \mathbb{N}$:

Figures (9)

  • Figure 1: Balancing reactive power in an electric grid is necessary to stabilize voltage and ensure power transfer. As grids decentralize, DERs can be utilized to provide reactive power support throughout the distribution system, with more flexible power factors and distributed control units. They can replace traditional reactive power suppliers, which are limited in PF and expensive to operate. However, to provide reactive power DERs must be incentivized to do so.
  • Figure 2: Reactive power compensation for ISO/RTO regions in the US with corresponding estimates on the reactive power revenue potential for solar and storage in those regions michael_borgatti_adrian_kimbrough_steven_shparber_reactive_nodate.
  • Figure 3: The proposed retail market structure is outlined here. The DSO oversees the market operation. Using wholesale LMPs at the distribution grid feeder and other grid information, the market simultaneously clears locational prices for real and reactive power. Price negotiations occur between resource owners using the PAC algorithm.
  • Figure 4: As the penetration of DGs increases, both the average price and Q-revenue ratio remain relatively stable. The price of reactive power is not strongly dependent on the PV penetration, making it more reliable for the transitioning grid. The revenue ratio shows that even as DGs are added, reactive power remains a reliable source of revenue.
  • Figure 5: With a high DG penetration of 160%, DGs nearly saturate the grid in the middle of the day. At the same time, DGs cover more than half of the reactive power load; much of the remaining load is covered by capacitor banks.
  • ...and 4 more figures

Theorems & Definitions (2)

  • Theorem 3.1
  • Proposition 3.2