Reactive power market design for unutilized grid-forming assets to address power factor penalties in Turkiye

The increasing penetration of small-scale PV distributed generation in medium-voltage networks has introduced unexpected challenges. While PV generation reduces the real power drawn from the transmission grid, the absence of monetization for reactive power means that reactive demand remains unchanged. This mismatch results in declining power factors and potential financial penalties for DSOs. A local reactive power market offers an alternative solution, not for voltage stability but specifically for maintaining the power factor. This paper proposes a reactive market framework tailored for Turkiye, covering its operational steps, market-clearing process, demand elasticity, payment structure, and mathematical model. The framework incorporates a ±10% forecast tolerance to discourage gaming and promote fairness. It introduces the concept of a sustainability threshold to ensure that energy sustainability remains central to the system operations. Finally, two key regulatory proposals are discussed to accelerate implementation: spatial aggregation of power factor limits to increase competitiveness and dynamic, seasonally-adjusted thresholds to reflect demand seasonality.