Wind power is the one of most promising renewable energy sources today, but the rapid development of wind power installations should be balanced with the capability of the power system. In a deregulated power system, the basic responsibility of the Independent System Operator (ISO) is to maintain system reliability and security by providing for ancillary service such as reactive power support. Reactive power management is required to support the real power shipment and supply reactive loads reliably and securely. In this thesis, DFIG turbine is integrated to the IEEE 14-bus test system to analyze the best integrated location to reach optimum ancillary service. There are three methods of reactive power procurements are applied in integrated system to illustrate the best procurement model; expected formula cost (EFC) with locational marginal pricing (LMP) based, modified total payment function (TPF) and marginal benefits cost. The results show that wind integration on bus number 3 has less cost generation and high profit system. Cost generation of wind integration on bus 3 can be reduced up to 21.8%. Profit system on similar location can be increased up to 130%. The minimum ISO support is achieved by marginal benefits cost method. The closure of this thesis is societal advantage function (SAF) optimization of final generator reactive power cost payment after considering bids from each service provider. Maximum payment of reactive power is achieved by wind integration on bus number 3. Generator receive reactive power payment per hour of 4,992.2 $ for 110% load factor and 5,908.9 $ for 120% load factor. The SAF optimization gives the results that would form a basis of contractual agreement for provisional calculation of reactive power procurement.

Wind power is the one of most promising renewable energy sources today, but the rapid development of wind power installations should be balanced with the capability of the power system. In a deregulated power system, the basic responsibility of the Independent System Operator (ISO) is to maintain system reliability and security by providing for ancillary service such as reactive power support. Reactive power management is required to support the real power shipment and supply reactive loads reliably and securely. In this thesis, DFIG turbine is integrated to the IEEE 14-bus test system to analyze the best integrated location to reach optimum ancillary service. There are three methods of reactive power procurements are applied in integrated system to illustrate the best procurement model; expected formula cost (EFC) with locational marginal pricing (LMP) based, modified total payment function (TPF) and marginal benefits cost. The results show that wind integration on bus number 3 has less cost generation and high profit system. Cost generation of wind integration on bus 3 can be reduced up to 21.8%. Profit system on similar location can be increased up to 130%. The minimum ISO support is achieved by marginal benefits cost method. The closure of this thesis is societal advantage function (SAF) optimization of final generator reactive power cost payment after considering bids from each service provider. Maximum payment of reactive power is achieved by wind integration on bus number 3. Generator receive reactive power payment per hour of 4,992.2 $ for 110% load factor and 5,908.9 $ for 120% load factor. The SAF optimization gives the results that would form a basis of contractual agreement for provisional calculation of reactive power procurement.

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