The rising demand for electric power, inadequate power generation and scarcity of transmission facilities forces the power system to be operated under stressed conditions. At heavily loaded conditions the power system must be provided with sufficient reactive power reserves in order to avoid voltage instability. Minimizing real power loss in transmission lines and the voltage deviation at the load buses in a power system is also essential. So optimization of reactive power plays a vital role in maintaining voltage stability and reducing real power losses of the power systems. In deregulated electricity market, reactive power provision needs to be made by Independent System Operator (ISO) in order to meet contracted transaction in a secure manner. So optimization of reactive power becomes essential in a deregulated power system environment because ISO chooses the optimum bidders based on real power cost characteristics and the reliability of power being delivered. In this paper reactive power flow problem is solved and Particle Swarm Optimization (PSO) technique is used for optimizing the values of generator voltage,transformer taps and switchable VAR sources. MATLAB is used for performing optimal power flow and formulating the algorithm for optimization of reactive power flow using PSO. IEEE-30 bus system has been used to evaluate the effectiveness of proposed system.
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