A Review of the Reactive Power Compensation Regulation in India

Abstract

This paper discusses the key issues around reactive power planning, management and efficient pricing in India, especially for dynamic reactive power (DVAr) from non-transmission resources which is critical for maintaining voltage stability. This is an emerging area of priority in India considering some of the past events including near misses and as the system undergoes a major transition with traditional DVAr resources in fossil fuel power plants replaced by variable renewable energy (VRE). The current draft Indian Electricity Grid Code (IEGC) introduces a regional model linked to voltage level at the EHV level and pricing mechanism that explicitly recognizes a compensation to the generators at 5 paise/kVArh (US${\$}$0.65/MVArh). There will need to be further refinements to it going forward to recognize the dynamic nature, location, role of DVAr reserve to maintain stability. DVAr resources will need a major boost in supply as well as prices to support investment in a wide array of VAr resources. These refinements will need to be articulated through a proper reactive power management policy informed by detailed reactive power planning and pricing studies. The paper concludes with the contours of a methodology and data issues that will be needed to support such policy analysis.