International Reactive Power Markets

"Principles for Efficient and Reliable Reactive Power Supply and Consumption" Staff Report Docket № ADO5-1-000 February 4, 2005

Authors: John D. Kueck, Brendan J. Kirby, Leon M. Tolbert and D. Tom Rizy, Voltage Regulation with Distributed Energy Resources (DER),Oak Ridge National Laboratory, Oak Ridge, Tenn.

           There are several market designs throughout the world for reactive power that have developed in the recent past. The mechanisms include requirements, contracts and real-time prices. In this chapter we describe the market designs for reactive power in several Canadian provinces and several countries.
           Reactive Power Markets in Canada. In Canada each province determines its own electricity policy and hence, regulatory practices as they relate to the provision and compensation for reactive power. Ontario and Alberta have independent system operators.
           In Ontario, all generators of more than 10 MW connected to the grid controlled by the Independent Electric System Operator (IESO - formerly the Independent Electric Market Operator, or IMO) are required by the market rules to have the capability of supplying at their terminals reactive power in the range of 90% lagging (injecting into the system) and 95% leading (absorbing from the system) based on the rated real power at rated voltage. The generators must be capable of operating continuously at full output within +/- 5% of the generator's rated terminal voltage. The generators are not required to operate continuously outside this voltage range to satisfy reactive power requirements.
           Generators who have signed ancillary service contracts for reactive support and voltage control are compensated for the incremental costs from energy losses incurred by running at non-unity power factor or costs of running as synchronous condensers at the IESO's request. They are also compensated for their lost profits if directed to provide reactive capability outside the market rule requirement range.
           Shunt reactive compensation, primarily switched capacitors or reactors, is installed by the transmission owner(s) to meet the forecast reactive power requirements as part of their transmission investment programs.
           In Alberta, generators may be penalized if they are not capable of producing or absorbing reactive power within a 0.90 lagging and 0.95 leading power factor range. These penalties can constrain MW output for a specific period.
           In transmission constrained areas where generators provide "transmission must run" service, the contracts include compensation for reactive power.
           In Manitoba, generators are compensated when they provide reactive power capability outside of the normal range specified in the Transmission System Interconnection Requirements. The compensation mechanism is defined in the interconnection tariff and is based on generators verifiable costs to provide the extra reactive power.
           In Quebec and British Columbia, the Open Access Transmission Tariff treats reactive support and voltage control as an ancillary service. The cost of providing this service is recovered from the transmission customer and paid to the suppliers. Beyond this there are neither incentives nor penalties for the provision of reactive power.
           Reactive Power Markets in Europe. In Great Britain, in the early 1990s, after privatization and corporate unbundling of generation, transmission and distribution, the England-Wales market started with a cost-reflective (cost-based) approach to paying generators for reactive power. Since the mid-1990s, a market-oriented approach to reactive power has evolved.
           Generators with a capacity greater than 50 MW are required to have a 0.95 leading power factor to a 0.85 lagging power factor capability at the high voltage side of the generator step-up transformer. After extensive consultation with market participants, metering and monitoring rules were established and new dispatch rules were developed.
           The National Grid Co. (NGC), which is both the system operator and the transmission owner, sends the generator a dispatch signal consisting of the amounts of real power and reactive power within a range of the required generator capability. A generator can accept a default payment for reactive power of approximately $2.40/Mvarh leading or lagging, or as an alternative, the generator may offer contracts with a minimum term of one year. The offer consists of three parts: a synchronized capability price in P/ Mvar, an availability capability price in P/Mvar and a utilization price in P/ Mvarh. The grid company assesses the offer, historical performance and effectiveness of each generator against its locational forecast needs in about 20 electrical zones to decide which offers to accept. This provides generators incentives to offer capability beyond the requirements, lowering investment requirements for the transmission system.
           In Sweden, most of the generation (primarily hydro) is located in the north Transmission System while the transmission system carries the power to the south where most of the load is located. Reactive power, which is supplied mostly in the south, is supplied on a mandatory basis and there is no compensation. The goal is to keep reactive power flow on the transmission system close to zero, especially at certain interfaces. Some large generators are seldom used for voltage control and are operated at a constant reactive power output. Hydro and thermal units are required to maintain a capability to inject reactive power of one third the amount of active power injection (a power factor of approximately 0.90). Network operators use as much static reactive power as possible. In the Netherlands, the network companies have local reactive power requirements. These companies purchase reactive power locally through bilateral contracts with generators or through exchange with other network companies. Generators contracted for the reactive power service are for their reactive power capacity only. No payment is made for reactive power supplied.
           The Belgian Independent System Operator has a transmission tariff for reactive power and voltage regulation that has a small charge per Mwh for International Reactive Power Markets a specified power factor range and a much higher charge outside of this range. In the power factor range 0.95 leading to 0.95 lagging, for power greater than 10% of the contracted real power, the reactive power charge varies with voltage of the point of interconnection to the transmission network. In the transmission network the charge is 0.21 Euro/MWh ($US 0.27). At the network side of transformers into the medium voltage distribution network, the tariff is 0.23 Euro/MWh ($US 0.31). For reactive power outside the 0.95 leading/lagging power factor range, the charge is 6 Euro/Mvarh ($US 7.83). When the real power is less than 10% of the contracted amount, the lower charge applies for reactive power up to 32.9% of the real power, and the 6 Euro/Mvarh charge applies if reactive power is above 32.9% of 10% of the contracted amounts.
           The Reactive Power Markets in Other Countries. The Australian ISO provides reactive power compensation to generators and synchronous condensers. For the generators there are mandatory capabilities (0.9 lagging and 0.93. leading) and compensation for accepted offers of higher capabilities. The providers receive an availability payment, an enabling payment when dispatched and a compensation payment when their generators are restrained from operating according to market conditions. The voltage control sequence is generally as follows: capacitors and SVCs are switched on; reactive power is provided from generators where real power output is not constrained; in specific areas, synchronous compensators are called from a merit order depending on price; real power generation is constrained; and, lastly, market trades are curtailed.
           In India, the state electricity boards (similar to load serving entities) were drawing large amounts of reactive power from the EHV grid, causing 20% voltage drops on the 400-kV system, avoidable transmission losses and considerable reactive power from generators. The Indian regulator put a 4 paise/kvarh (approximately $1/Mvarh) price (buy and sell) on reactive power when the voltage dropped below 97% of nominal. In off-peak periods the charge is reversed when the voltage goes above 103%. All low voltage problems have now vanished. In Japan, Tokyo Electric Power Company (TEPCO) gives their retail customers the financial incentive to improve their power factor. It comes in the form of a discount of the base rate. The discount is based on the customer's power factor:

Base Rate = (Unit Price [Yen/kW])*(Contract kW)*(1.85-Power Factor)
Electricity Rate = (Unit Price [Yen/kWh])*Total Usage [kWh]
           In Argentina, generators, transmission operators, distribution operators, and large loads have obligations to serve reactive power. Generators are required to produce and consume reactive power within the limits of their capability curves (D-curves). Transmission operators are required to maintain voltages within +/-3% for 500 kV and +/-5% for 220 kV and 132 kV. There are two levels of sanctions for failure to comply with the requirements.
           If the outage is announced in advance, there is a reactive power charge. There is an additional penalty if the outage is unannounced. Additionally, if an uncommitted generation unit is dispatched as a result of a reactive power shortage, the parties responsible for the shortage must pay the generator its startup costs. The penalty for an announced generator outage is the operations and maintenance cost of substitute equipment and a reactive power charge of Argentine $0.45/Mvarh ($0.15 US). If a generator outage is expected to last for more than one season, the generator may elect to install capacitors or reactors, as appropriate, to avoid the penalty charge. If an outage is announced a day or a week in advance, the penalty charge is Argentine $4.50/Mvarh ($1.50 US).


назад в библиотеку