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2003-04 Seminars
Efficient pricing of a bundled product
of both real and reactive power
Serhiy Kotsan
West Virginia University Department of
Economics
Abstract
This paper examines price mechanism with one price assigned
for each level of bundled real and reactive power. This pricing approach
is simulated on the simple 3-bus system power auction where generators
provide their bids on the bundle of real and reactive power. System
operator (SO) is able to dispatch generators efficiently when the
generators bid competitively. Incentives to exercise market power with
respect to reactive power are tested on the auction. In addition, 30-bus
network was tested, with the purpose of identifying generators willing
to raise reactive power bids.
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