Iranian Journal of Electrical and Electronic Engineering

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Unlike perfect competitive markets, in oligopoly electricity markets due to strategic producers and transmission constraints GenCos may increase their own profit through strategic biddings. This paper investigates the problem of developing optimal bidding strategies of GenCos considering participants’ market power and transmission constraints. The problem is modeled as a bi-level optimization that at the first level each GenCo maximizes its payoff through strategic bidding and at the second level, in order to consider transmission constraints a system dispatch is accomplished through an OPF problem. The AC power flow model is used for proposed OPF. Here it is assumed that each GenCo uses linear supply function model for its bidding and has information about initial bidding of other competitors. The impact of optimal biddings on market characteristics as well as GenCos’ payoffs are investigated and compared with perfect competitive markets where all the participants bid with their marginal costs. Furthermore, effects of exercising market power due to transmission constraints as well as different biddings of strategic generators on GenCos’ optimal bidding strategies are presented. Finally IEEE-30 bus test system is used for case study to demonstrate simulation results.

Keywords: Bidding Strategy , Market Power , Nash Equilibrium , Oligopoly Market , Transmission Constraints

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