Long-run incremental cost pricing for the use of network reactive power compensation devices for systems with different R/X ratios

Abstract

The LRIC-voltage network charging pricing principle is intended to reflect the investment cost of a network to maintain the quality of supply, i.e. ensuring that nodal voltages are within required statutory limits. This charging principle is based on spare nodal voltage capacity or headroom of an existing network (distribution and transmission systems) to provide the time to invest in reactive power (VAr) compensation devices. A nodal reactive power/real power withdrawal/injection will impact on system-wide voltages, which in turn defer or advance the future network investment, the LRIC-voltage network charge aims to reflect the impact on network voltage profiles as the result of nodal reactive power/real power perturbation. This approach also provides forward-looking economically efficient signals that reflect both the voltage profiles of an existing network and the indicative future cost of VAr compensation assets. The forward-looking LRIC-voltage charges can be utilized to influence the location of future generation/demand for bettering the network quality. The LRIC-voltage network charges are different for different network types. What sets networks apart are the resulting resistance/reactance (R/X) ratios on network circuits. This paper analyses the trend of LRIC-voltage charges on different types of networks, providing insights into how charges will change with different R/X ratios. These charges provide correct economic signals to potential network users, which help them to make informed decisions as to whether to invest in reactive power devices or pay for the network for reactive power provision. This will ultimately guide towards an effective and efficient usage of the network's reactive power resources. This study is carried-out on a 9-bus network which is a subset of the practical Western Power Distribution (WPD) network. All views presented in this paper are those of the authors and not necessarily those of WPD.