A Cost-Benefit Analysis for Applying Static VAR
Compensator to Electric Arc Furnaces
Abstract— Electric Arc furnace (EAF) represents one of the most
intensive and disturbing loads in the electric power systems. Utilities
are concerned about the power quality issues such load can cause
and try to take precautions to minimize their effects on power
network at Point of Common Coupling (PCC). In this paper,
mitigation of such power quality issues can be shown to be also
beneficial to industrial plant from a techno-economic point of view.
One of the most important mitigation solutions is the Static VAR
Compensator (SVC). This study presents the results of applying SVC
in Main Receiving Substation (MRSS) of Ezz Al-Dekheila (EZDK)
Steel Company and the cost–benefit analysis from such application.
Keywords-component— Electric Arc Furnace, Static VAR
Compensator (SVC), Power Quality, Harmonics, Flickers, Cost-
Benefit Analysis
I. INTRODUCTION
Electric Arc Furnace (EAF) is a widely used device in
metallurgical and processing industries. It is a nonlinear time
varying load, which can cause many problems to the power system
quality such as unbalance, harmonics, inter-harmonics and voltage
flicker. Thus, study of electric arc furnaces has potential benefits
for both customers and utilities. An accurate modeling of an EAF
will help in dealing with the problems caused by its operation [1].
Minimization of the undesirable impact of EAFs can improve
electric efficiency and reduce power fluctuations in the system.
The description of an arc furnace load depends on the
following parameters: arc voltage, arc current and arc length
(which is determined by the position of the electrodes). Based on
the study of above essential parameters, many models are set up
for the purpose of harmonic and flicker analysis. In general, they
may be classified as follows, a) Time domain analysis method
(Characteristic Method, Time Domain Equivalent Nonlinear
Circuit Method), and b) Frequency Domain analysis method
(Harmonic Voltage Source Model, Harmonic domain Solution of
nonlinear differential equation). Each method has its own
advantages and disadvantages. Comparison and commendation of
different arc furnace models were presented in [2-6].
Most of the existing models make some kinds of
approximation on the characteristic of arc. There have been two
general approaches to the problem of arc furnace modeling:
stochastic and chaotic. In most of the previous studies, stochastic
ideas are used to capture the periodic, nonlinear, and time-varying
behavior of arc furnaces, where the arc furnace load is modeled as
a voltage source. The model is based on representation of the V-I
characteristics using sinusoidal variations of arc resistance and
band limited white noise.
Research study shows that, the electrical fluctuations in the arc
furnace voltage have proven to be chaotic in nature. Some chaos-
based models reported have been applied to simulate ac and dc arc
furnaces [7-10].
This paper intends to present an integrated simulation
modeling of EAF and SVC networks instead of using single valued
piece-wise linear V-I characteristics of the arc furnace load, a
dynamic and multi-valued V-I characteristics are obtained by
using corresponding differential equations [11]. The output of
dynamic model developed is modulated with low frequency chaos
signal to produce the arc furnace model. The model developed is
connected to actual power system model to study the voltage
fluctuation.
The paper is organized as follows; Section II introduces the
modeling of EAF. Section III discusses the SVC theory of
operation. Section IV describes the Case Study for Integrated
Model of EAF and SVC. Finally, the conclusion is presented in
section V.
II. MODELING OF EAF
A. Arc Furnace Operation
Electric arc furnaces are available in both alternating current
(AC) and Direct current (DC) models. A transformer directly
energizes furnace electrodes in a high current circuit in arc
furnaces, whereas dc furnaces employ a controlled rectifier to
supply dc to the furnace electrodes. Arc furnace operation may be
classified into stages, depending on the status of the melt and the
time lapse from the initial energizing of the unit.
Consider the case of the processing of scrap steel in an AC
EAF. During the melting period, pieces of steel create momentary
short circuits on the secondary side of the furnace transformer.
These load changes affect the arc characteristics, causing
fluctuations of current. The current fluctuations cause variations in
reactive power, which cause a momentary voltage drop or flicker,
both at the supply bus and at nearby buses in the interconnected
system. The arc currents are more uniform during the refining
period and result in less impact on the power quality of the system.
Arc furnaces also create harmonic load currents and asynchronous
spectral components. Harmonics represent an important power
quality issue, because they may cause undesirable operating
conditions such as excess losses in transformers, mal-operation of
drive controllers etc. Fig.1 shows typical installation of EAF.
Fig. 1. Typical installation of EAF
 Fig.2 shows actual and piece-wise linear approximation of V- The power balance equation for the arc is
I characteristic of an Arc Furnace Load where Vig is the ignition
voltage and Vex is the extinguish voltage. P1 + P2 = P3 (1)
Where
P1 represents the power transmitted in the form of heat to the
external environment.
P2 represents the power, which increases the internal energy in
the arc, and which therefore affects its radius.
P3 represents the total power developed in the arc and
converted into heat. The above equation can be represented in the
form of differential equation [13] of the arc:
dr K3
K1 r n + K 2 r = i2 (2)
dt rm+2
Fig. 2. Actual and piece-wise linear approximation of V-I characteristic of an Arc
Furnace Load
Where
B. Chaotic Dynamics in Electric Arc Furnaces r is the arc radius and is chosen as the state variable instead of
Chaos, also known as the strange attractor, does not generally taking arc resistance or conductance.
have an accepted precise mathematical definition. Usually from a k1, k2 and k3 are constants relative to EAF melting conditions.
practical viewpoint, it can be defined as the bounded steady-state
behavior that does not fall into the categories of the other three m is the variations of the resistivity with temperature.
steady-state behaviors i.e. the equilibrium points, periodic n is the conditions of cooling.
solutions, and quasi-periodic solutions. The equilibrium points are
zero dimensional and periodic solutions are one-dimensional, The arc voltage is given by:
where as strange attractors are more complex and their dimension i
is a fraction. A chaotic system is a deterministic system that v= (3)
g
exhibits random movement and it is a nonlinear system that
exhibits extreme sensitivity in the state trajectory with respect to Where
the initial conditions. It has been observed that the electric
fluctuations in an arc furnace are chaotic in nature [12]. g is defined as arc conductance and is given by the following
equation:
The chaotic component of the arc furnace voltage is obtained
rm+2
from the chaotic circuit of Chua [10]. To exhibit chaos, the circuit g= (4)
K3
consisting of resistors capacitors and inductors has to contain the
following: It is possible to represent the different stages of the arcing
(i) At least one locally active reactor process by simply modifying the parameters of m and n. The
complete set of combination of these parameters for different
(ii) At least one nonlinear element. stages of electric arc can be found in [10].
(iii) At least three energy storage elements
Chua’s circuit satisfies the above requirements.
C. Matlab Simulink Model of EAF
The development of general dynamic arc model in the form of
a differential equation is based on the principle of conservation of
energy. The approach is fundamentally different from those
methods where some empirical relation is used to represent the
electrical arc. In the dynamic model, such relations which are
implicit for steady state conditions are not pre-defined and give
result for different conditions depending on both frequency and
current magnitude. Here the arc furnace is modeled in two stages.
First dynamic electric arc modeling is done and the obtained arc
voltage is then modulated with chaotic signal to produce final arc
furnace model.
 The state space equations of the above-mentioned system III. SVC THEORY OF OPERATION
would be in this case: By definition, capacitors generate and reactors (inductors)
Ro =
K3
i2 -
K1
R (5) absorb reactive power when connected to an ac power source.
K2 R3 K2 They have been used with mechanical switches for (coarsely)
K3
controlled VAR generation and absorption since the early days of
V=i* 2 (6) ac power transmission. Continuously variable VAR generation or
R
Implementing the above equations using Simulink blockset as absorption for dynamic system compensation was originally
shown in Fig.3, taking the parameters K1= 3000; K2 = 1; K3 = 1; provided by .over- or under-excited rotating synchronous
n=2; m= 0 to simulate melting stages, the dynamic voltage/current machines and, later, by saturating reactors in conjunction with
characteristic of the electric arc are modeled as shown in Fig.4. fixed capacitors.
High power, line-commutated thyristors in conjunction with
capacitors and reactors have been employed in various circuit
configurations to produce variable reactive output. These in effect
provide a variable shunt impedance by synchronously switching
shunt capacitors and/or reactors "in" and "out" of the network as
shown in Fig.6

Fig. 3 MATLAB/ Simulink model of electric Arc Furnace

Fig. 6 SVC Components

The SVC is used to regulate voltage on a system. When system

voltage is low, the SVC generates reactive power (SVC capacitive).
Fig. 4 Dynamic Characteristics of EAF When system voltage is high, it absorbs reactive power (SVC
inductive) as shown in Fig.7.
This model is then combined with the band limit white noise
to create the chaotic nature of the arc furnace voltage and current
parameters as shown in the control structure of EAF as shown in
Fig.5.

Fig. 5.Control Structure of Arc Furnace

Fig. 7 SVC Interaction with Power Network Dynamics

 IV. FINANCIAL BENEFITS TO STEEL MAKING
PLANTS DUE TO SVC OPERATION
A. Power Factor
As can be seen on the below trend that the voltage during
SVC#1 out of Service can reach 30.4 kV as a minimum value.
While when SVC #1 is on service, the voltage minimum value
is 32.75 kV.

Fig. 11. Power and Voltage profile for one heat EAF#2 when SVC#1 is On

Based on the design values of the EAF, the following cases

are estimated for SMP#1 operation, and are shown in Table I.

TABLE I. Operation Parameters with and without SVC

Operation SVC In Service SVC out of Service
Tap 10 10
Name Plate Voltage Ratio 33/0.721 33/0.721
Actual Voltage Ratio 33/0.721 30.9/0.675
Fig. 8. Power and Voltage profile for EAF#2 on 17.11.15 P.F 0.9 0.78
Active Power
63 54.6
(MW)
On-TAP Time (min.)* 48.3 55.7
# Heats
91.79 82
(Turn Around +delays 14.4 min.)
* kwh/ton ∗ EAF capacity (tons) ∗ 60 (min)
On Tap time (min.) =
𝐴𝑐𝑡𝑖𝑣𝑒 𝑃𝑜𝑤𝑒𝑟 (𝑘𝑊)∗𝐸𝐴𝐹 𝑒𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦∗𝐸𝐴𝐹 𝐸𝑞𝑢𝑖.𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑖𝑙𝑖𝑡𝑦

The above table shows 4 additional heats for 4 EAF’s due to on

tap time saving with SVC in operation.

Table II shows the actual EAF’s performance with and without

SVC for the same operating conditions:

TABLE II. Actual Performance with and without SVC

Fig. 9. Power and Voltage profile for EAF#2 on 21.11.15 Comparison Planned Without SVC in With SVC in
Point of View Figures Operation Operation
In addition, as can be seen below for the integrated P.F along Tapping Yield % 87.3 86.3 87.3
the heat is about 0.78 and over 0.9 when SVC#1 is on Availability % 96.5 96.6 96.5
DRI % 70 64.8 65.6
On Tap Time
58.56 59.7 54.7
(Min./Heat)
Turn Around
Time 11.8 12.8 12.7
(Min./Heat)
Delays Time
2.6 2.6 3.5
(Min./Heat)
EAF Power
565 573.42 562.6
KWH/T
# Heats 77 77 80
In addition to the reduction in the monthly electric bill due to
power factor improvement to a value of more than 0.98, which
Fig. 10. Power and Voltage profile for one heat EAF#1 when SVC#1 is Off
save around 500,000 $ /year.
B. Payback Period, Net Present Value (NPV) & Internal Rate of
Return (IRR) Study
Several evaluation methods can be used according to the
company’s internal evaluation criteria for investment. The most
familiar methods are [14-15]:
i) Payback time (PBT)
The payback time represents the amount of time that it takes for a
project to recover its initial cost. The use of the PBT as a capital
budgeting decision rule specifies that all independent projects
with a PBT less than a specified number of years should be
accepted. When selecting from mutually exclusive projects, the
project with the shortest payback is to be preferred.
The PBT can be calculated from eq. (7):
Net Investment
PBT = (7)
Net Annual Return
Where net investment is the initial cost (mitigation equipment
cost + installation cost) and net annual return is the annual
expenses (operation + maintenance) subtracted from the annual
benefits.
Although widely used, payback time suffers from several
drawbacks. First, PBT does not consider the time-value of money.
The second flaw is that payback does not consider the effects of
different life-spans of the alternatives, thus penalizing projects
that have long potential life-spans. The third drawback is that the
accept/reject criterion is often short. For example, many
organizations require a 1 to 3 year payback period to consider a
cost-saving project and place a higher priority on projects with a
shorter payback time.
ii) Net present value (NPV)
The net present value (NPV) of a project indicates the expected
impact of the project on the value of the company. Projects with
a positive NPV are expected to increase the value of the company.
Thus, the NPV decision rule specifies that all independent
projects with a positive NPV should be accepted. If NPV is
greater than zero the project is valid, since the revenues are
enough to pay the interest and recover the initial capital cost
before the end of the life of investment. When NPV equals zero,
the balance occurs at the end of the life, and the investment is
scarcely attractive. When selecting from mutually exclusive
projects, the project with the largest positive NPV should be
chosen.
The NPV can be calculated from eq. (8):
(solution net saving)t
NPV = ∑ni=0 t – C0 (8)
(1+r)
Where r is the discount rate, C0 is the initial investment, t is the
number of years, and n is the lifetime of the investment.
When comparing between two or more projects, the project with
the higher NPV should be selected.
iii) Internal Rate of Return (IRR)
Internal rate of return (IRR) is the interest rate at which the net
present value of all the cash flows (both positive and negative)
from a project or investment equal zero. Internal rate of return is
used to evaluate the attractiveness of a project or investment. If
the IRR of a new project exceeds a company’s required rate of
return, that project is desirable. If IRR falls below the required
rate of return, the project should be rejected.
A general rule of thumb is that the IRR value cannot be derived
analytically. Instead, IRR must be found by using mathematical
trial-and-error to derive the appropriate rate. However, most
business calculators and spreadsheet programs will automatically
perform this function.
C. Application to the Case Study
Assuming the following figures the NPV & IRR can be calculated
as following:
 Capital investement of 4,550,000 $
 Benefit 1 from additional 110,160 TMS/year ~
5,500,000 $/year
 Benefit 2 from P.F bonus in electric bill ~ 500,000 $/year
 Assuming life time of 20 years and Interest Rate of 10%
 NPV = 46,531,382 $ in total 20 years lifetime of the
project
 IRR= 131.8% which exceeds the accepted 10% rate by
13 times
 Pay Back period < 1 year.
V. CONCLUSION
The EAF model in this paper gives more realistic simulation to
the EAF taking into consideration its chaotic nature.
The significant operational benefits can be summarized into
higher P.F reaching more than 98% which is miraculous for a steel
making plant, voltage stabilization on the steel making bus with
various EAF loading conditions which means increased
production and smoother operation and finally lower flickering,
lower harmonic levels which means cleaner bus at PCC.
The financial impact showed that power quality is not only
beneficial for utility power grid but also for the plant itself. The
operation performance showed decrease in On-Tap time by 5
minutes resulting in increased daily productivity of 3 heats,
meaning 1,000 Tons molten steel/year which can be estimated to
achieve payback period for the SVC investment in less than one
year for such application.
In addition, the SVC network reactions were also discussed to
validate design limits and compare between actual and simulated
network reactions to dynamic loading of EAF’s during SVC
operation.
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