Two kinds of power are required to operate an electric power system: real power, measured in watts, and reactive power, measured in volt-amperes reactive or VARs. Reactive power supply is one of a class of power system reliability services collectively known as ancillary services, and is essential for the reliable operation of the bulk power system. Reactive power flows when current leads or lags behind voltage. Typically, the current in a distribution system lags behind voltage because of inductive loads such as motors. Reactive power flow wastes energy and capacity and causes voltage droop. To correct lagging power flow, leading reactive power (current leading voltage) is supplied to bring the current into phase with voltage. When the current is in phase with voltage, there is a reduction in system losses, an increase in system capacity, and a rise in voltage. Reactive power can be supplied from either static or dynamic VAR sources. Static sources are typically transmission and distribution equipment, such as capacitors at substations, and their cost has historically been included in the revenue requirement of the transmission operator (TO), and recovered through cost-of-service rates. By contrast, dynamic sources are typically generators capable of producing variable levels of reactive power by automatically controlling the generator to regulate voltage.
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