Optimal reactive power compensation in a deregulated distribution network

This paper investigates the optimal reactive power compensation using shunt capacitors, considering reconstruction of distribution power network. This new scenario allows the distribution network operator to consider reactive energy as a service to be sold to the transmission system. So, with considering the two main objectives, i.e. reduction of the real power losses and maximizing the reverse on investment, the distribution network operator obtains location, number and optimum capacitance of capacitor banks. Obtained results are under great influence of “reactive energy price”. Hence, the problem of optimization can be formulated for different values of this parameter and the threshold price belonging to reactive energy sale will be obtained. If the operator of distribution network sells the produced reactive energy in the distribution network at a price above the threshold price to transmission network, it is profitable to invest for installing the capacitor banks. It is also shown that amount of sold reactive power could have upper limit.