A novel approach for evaluating market power in reactive power markets

One of the main concerns for any power markets is whether individual participants can increase their profit by withholding capacity or bidding away from the marginal cost of providing the products. To address this concern, some tools and techniques for identifying and detecting dominant and must-run suppliers are required. Market power problems are more intricate in reactive power markets than those in other markets due to the specific properties of this ancillary service. This paper introduces a new structural index which takes into account reactive demand level, transmission network constraints, output limits, and circumstances of other suppliers. The proposed measure (reactive must procurement (RMP)) is a must-run index-based method which calculates the minimum reactive power capacity which must be procured by a reactive source (whether in generation or absorption mode) to supply reactive requirements of system. To illustrate the simplicity, practicality, and usefulness of introduced measure, the proposed index is applied to the IEEE 57-bus test system. Copyright © 2010 John Wiley & Sons, Ltd.