High penetration levels of distributed photovoltaic (PV) generation on an electrical distribution circuit may severely degrade power quality due to voltage sags and swells caused by rapidly varying PV generation during cloud transients coupled with the slow response of existing utility compensation and regulation equipment. Although not permitted under current standards for interconnection of distributed generation, fast-reacting, VAR-capable PV inverters may provide the necessary reactive power injection or consumption to maintain voltage regulation under difficult transient conditions. As side benefit, the control of reactive power injection at each PV inverter provides an opportunity and a new tool for distribution utilities to optimize the performance of distribution circuits, e.g. by minimizing thermal losses. We suggest a local control scheme that dispatches reactive power from each PV inverter based on local instantaneous measurements of the real and reactive components of the consumed power and the real power generated by the PVs. Using one adjustable parameter per circuit, we balance the requirements on power quality and desire to minimize thermal losses. Numerical analysis of two exemplary systems, with comparable total PV generation albeit a different spatial distribution, show how to adjust the optimization parameter depending on the goal. Overall, this local scheme shows excellent performance; it's capable of guaranteeing acceptable power quality and achieving significant saving in thermal losses in various situations even when the renewable generation in excess of the circuit own load, i.e. feeding power back to the higher-level system.

6 pages, 5 figures, submitted to IEEE SmartGridComm 2010