Reactive Power Capability

Reactive Power Capability - A Challenge to Grid Reliability

By Michael J. Zimmer

A significant challenge to the transmission providers recognized by the National Electric Reliability Council (NERC) will be to maintain adequate levels of reactive support for the transmission system in the evolution to regional markets in the U.S. This concern has escalated since our original E-Notes report of December 12, 2000. Unlike real power (MW), the reactive component of power (Mvar) cannot be easily transmitted over longer distances and must generally be supplied at the local level. Without adequate reactive power support, portions of the electric power system can be susceptible to potential voltage collapse or instability according to NERC. Sources of reactive power include generators, synchronous condensers, transmission lines, capacitors, and very specialized reactive support devices generally known as static VAR compensators (SVCs). Demand for reactive power is shaped by the size and type of demand, power transactions across the transmission system, and the loading of transmission facilities. This demand for reactive power is growing nationwide, as electric operations move to regional structures and some electric utilities have divested their generation.

The next step needs to introduce regional ancillary service markets to enhance reliability and provide a clearer basis of compensation for reactive power services. Order No. 888 envisioned this result, but that potential has not been achieved outside of the Northeast and Middle Atlantic regions. By introducing a regional reactive power market for example, economies and market demand properly structured through FERC-approved tariffs will induce sufficient generating units to be available to provide VARS support and participate in the regional reactive power market. With more VARs support, regional reliability can be planned for and sustained. This can be implemented further in the RTO/ISO regional planning process.

Decline in Reactive Improvements
Many electric utilities made concerted efforts to improve reactive support as demand grew by adding shunt capacitors on their distribution and subtransmission systems, NERC reports. Utilities can indeed address reactive power problems using shunt capacitors in a limited way. But this approach actually embrittles the system by raising the critical voltage -- that is, a utility can actually accelerate voltage collapse if it installs too much capacitance on its system. Beyond a certain level, a utility needs to have real power resources to properly support voltage levels. However, such distribution reactive improvement programs have declined in recent years within the utility industry. The physics of transferring power across a transmission line also causes it to consume reactive power, with increased transfers resulting in escalating voltage decline across the line. When heavy power transfers occur across a transmission system interface and transmission lines are heavily loaded, voltage in the area of the interface can become depressed if sufficient reactive supplies are not available to the system, NERC has reported.

Reactive support programs must be continuous as demand on the distribution system continues to escalate. A chief component of that demand growth in the need for reactive improvement has been air conditioning, which particularly requires increasing levels of reactive support. Most air conditioner demand is motor load, requiring significant reactive power support. Because of its interaction with the transmission system, reactive support is one area that distribution companies must not ignore if reliability is to be maintained on the bulk transmission system. For example, in the area northwest of Green Bay, Wisconsin, reactive support problems were caused by a combination of large industrial motors at paper mills, plus a proliferation of second homes with air conditioning. What was needed as reported by American Super Conductor is a solution that places better reactive support closer to the load. Pushing reactive power down the line from a central source (large-scale generator or SVC installation) is inefficient and can be risky to the system. Other solutions like super magnetic energy storage does (like distributed generation) place the VARs in the extremities of the system at distribution substations.

Open Access Impacts
When transfers of power follow a consistent directional pattern, it is relatively easy to plan and justify costs for the required reactive support for the transfers. For example, significant reactive support was added on the bulk system to enable higher transfers from ECAR to MAAC and the VACAR subregion of SERC in the early 1990s. However, under open access transmission, transactions are conducted in large numbers across long distances, and often flow in directions that were not anticipated when the transmission system was originally planned and built. The direction and amount of such transfers has become much more volatile, changing daily, and sometimes hourly NERC has observed. Consequently, planning reactive support enhancements for improving transfer capability has become more difficult as the pace and level of transactions have become more short-term and real-time.

In fact, the stresses placed put on the power grid show that it is more important than ever to have a strong, robust and flexible grid capable of handling a wide variety of power flows reliably. And as the current gas market illustrates, we clearly can't bank on local solutions that make customers vulnerable to gas shortages and catastrophic price spikes. We may need to think of other industries that have undergone successful deregulation -- e.g., telecom, natural gas, even airlines. The key to real customer choice was centered on increasing the capacity of the physical network -- optical fibers, gas pipelines and compressors, additional landing gates. Deregulation of these industries worked because of grid expansion. The challenge is to find ways to strengthen the grid.

Distributed generation, distributed super conducting magnetic energy storage, and new reactive power tariffs offer examples of how to possibly strengthen the existing grids. If needs change (say, loads disappear, new generators come on line, a new transmission line gets built), the system still benefits for the future. Entire wide-area grids can be reconfigured, literally on a year-to-year basis, to accommodate changing load flow patterns.

Lack of Incentives
However, there is currently no incentive to increase the levels of reactive support on the bulk power system, NERC has stated. In fact, there are disincentives, because generators are paid to produce real power, not reactive power under current contracting. There is a tradeoff between producing real and reactive power because reactive power generation decreases as the real output increases. A recent spate of nuclear unit upgrades effectively lowered the units' reactive power output capabilities as the real output of these nuclear units was increased. Current policies reflected in interconnection agreements may exacerbate this problem by raising pricing barriers to the provision of reactive power by IPP's, and a lack of comparability for this same ancillary service with utility-owned generation.

In the long term, transmission providers must reevaluate their bulk power systems in light of open access, including better planning for necessary reactive support. Business is increasing on the transmission system, but very little is being done to increase the load serving and transfer capability of the bulk transmission system. This will be essential for supporting development of regional transmission organizations (RTO). Most of the transmission projects planned over the next ten years are intended to reinforce parts of the system to alleviate local problems. The problem is that we haven't conceptually looked at transmission as a competitive enterprise to support power marketing, regional market liquidity and increased transfer capability. The dominant paradigm in restructuring is, we're only subjecting generation to competition -- the wires end of the business will remain a regulated monopoly.

While reactive supply has been implicated in investigations of major power outages, modeling the dynamic reactive output of generation under stressed system operating conditions has been difficult. The Interim Report on the August 14, 2003 outages summarized prior investigation recommendations:

Communicate changes to generator reactive capability limits in a timely and accurate manner for both planning and operational modeling purposes.
Investigate the development of a generator MVAr/voltage monitoring process to determine when generators may not be following reported MVAr limits.
Establish a common standard for generator steady-state and post-contingency (15-minutes) MVAr capability definition; determine methodology, testing, and operational reporting requirements.
Determine the generator service level agreement that defines the generator MVAr obligation to help ensure reliable operations.
Periodically review and field test the reactive limits of generators to ensure that reported MVAr limits are attainable.
Provide operators with on-line indications of available reactive capability from each generating unit or groups of generators, other VAr sources, and the reactive margin at all critical buses. This real-time information should assist in the operating practice of maximizing the use of shunt capacitors during heavy transfers and thereby increase the availability of system dynamic reactive reserve.
For voltage instability problems, consider fast automatic capacitor insertion (both series and shunt), direct shunt reactor and load tripping, and under-voltage load shedding.
Develop and periodically review a reactive margin against which system performance should be evaluated and used to establish maximum transfer levels.

Strategic Planning Opportunities for Reactive Power and Reliability
This raises several issues for future planning:
Can distributed generation become a new market source for reactive power capability?
Can distributed generation become a source of reliable transmission loading relief avoidance? Will mini grids become new control areas - islands of reliability?
Is there a third party, competitive market for reactive power? Is there a merchant reactive power plant market to avoid voltage reduction which should be encouraged?
There is a range of new technologies based on new materials -- superconductor and power electronics-based technologies that have the potential to change the electric industry landscape in much the same way that new materials-based innovations (e.g., optical fiber) transformed telecommunications. Will they evolve in the near term?
FERC-approved tariffs for reactive power need to be authorized, including IPP, merchant and QF facilities. Industry support and rate incentives may be needed.
Who manages this critical bulk power system issue in a post-restructured world? Generators? Transmission? Distributors? Marketers? The post August 14 study and the Congress shed new light on this issue, and appear to promote more regional solutions.
Have state rate freezes, and a lack of older plant retirements raised barriers to better reactive support?
Will this issue become impeded further with distribution company mergers and consolidations?
Will most new transmission gravitate to reinforce the system for local problems management, because of a lack of RTO's, funding support, and stronger regional siting? Are independent system operator's doing enough to manage this challenge? Do they have the right tools, enforcement procedures to succeed?
Is this another incentive for the power quality market to respond?
Should FERC interconnection standards be revised to offer further incentives and proper compensation for reactive power support?

The ability to transfer electric energy across interfaces or seams hampers reactive power support. NERC maintains it is a national imperative that reactive power improvements keep pace with the escalating demands being placed on the transmission systems to maintain reliability. We are already seeing this as an element of key market disruptions consistently over the past five years in the West, Midwest and Northeast. It appears reactive power support must ultimately be placed and coordinated among generation, transmission, marketing and distribution within the RTO/ISO. With existing regulatory structures, this could be falling in the cracks with open access transmission, as widely varying flow patterns and associated reactive demands have become commonplace and need accommodation. The maintenance of independent control areas compounds the reactive support problem. The reactive power support system will need to become more versatile for open access transmission objectives to be achieved, and needs further attention in the RTO formation process for RTO's to be successful and thrive in the maintenance of reliability under changing grid operations.

--Michael J. Zimmer is a partner in the Washington, D.C.-based law firm of Baker & McKenzie. He can be reached at telephone (202) 452-7055, fax, (202) 452-7074 or email, Michael.J.Zimmer@bakernet.com.

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