Transmission expansion in an oligopoly considering generation investment equilibrium

S. Saeid Taheri, Jalal Kazempour, Seyedjalal Seyedshenava

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Transmission expansion planning (TEP) is a sophisticated decision-making problem, especially in an oligopolistic electricity market in which a number of strategic (price-maker) producers compete together. A transmission system planner, who is in charge of making TEP decisions, requires considering the future generation investment actions. However, in such an oligopolistic market, each producer makes its own strategic generation investment decisions. This motivates the transmission system planner to consider the generation investment decision-making problem of all producers within its TEP model. The strategic generation investment problem of each producer can be represented by a complementarity bi-level model. The joint consideration of all bi-level models, one per producer, characterizes the generation investment equilibrium that identifies the future evolution of generation investment in the market. This paper proposes a tri-level TEP decision-making model to be solved by the transmission system planner, whose objective is to maximize the social welfare of the market minus the expansion costs, and whose constraints are the transmission expansion limits as well as the generation investment equilibrium problem. This model is then recast as a mixed-integer linear programming problem and solved. Numerical results from an illustrative example and a case study based on the IEEE 14-bus test system demonstrate the usefulness of the proposed approach
Original languageEnglish
JournalEnergy Economics
Volume64
Pages (from-to)55-62
Number of pages8
ISSN0140-9883
DOIs
Publication statusPublished - 2017

Keywords

  • Transmission expansion planning (TEP)
  • Generation investment equilibrium
  • Strategic producers
  • Mathematical program with equilibrium constraints (MPEC)
  • Equilibrium problem with equilibrium constraints (EPEC)
  • Oligopoly

Cite this

Taheri, S. Saeid ; Kazempour, Jalal ; Seyedshenava, Seyedjalal. / Transmission expansion in an oligopoly considering generation investment equilibrium. In: Energy Economics. 2017 ; Vol. 64. pp. 55-62.
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abstract = "Transmission expansion planning (TEP) is a sophisticated decision-making problem, especially in an oligopolistic electricity market in which a number of strategic (price-maker) producers compete together. A transmission system planner, who is in charge of making TEP decisions, requires considering the future generation investment actions. However, in such an oligopolistic market, each producer makes its own strategic generation investment decisions. This motivates the transmission system planner to consider the generation investment decision-making problem of all producers within its TEP model. The strategic generation investment problem of each producer can be represented by a complementarity bi-level model. The joint consideration of all bi-level models, one per producer, characterizes the generation investment equilibrium that identifies the future evolution of generation investment in the market. This paper proposes a tri-level TEP decision-making model to be solved by the transmission system planner, whose objective is to maximize the social welfare of the market minus the expansion costs, and whose constraints are the transmission expansion limits as well as the generation investment equilibrium problem. This model is then recast as a mixed-integer linear programming problem and solved. Numerical results from an illustrative example and a case study based on the IEEE 14-bus test system demonstrate the usefulness of the proposed approach",
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author = "Taheri, {S. Saeid} and Jalal Kazempour and Seyedjalal Seyedshenava",
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Transmission expansion in an oligopoly considering generation investment equilibrium. / Taheri, S. Saeid; Kazempour, Jalal; Seyedshenava, Seyedjalal.

In: Energy Economics, Vol. 64, 2017, p. 55-62.

Research output: Contribution to journalJournal articleResearchpeer-review

TY - JOUR

T1 - Transmission expansion in an oligopoly considering generation investment equilibrium

AU - Taheri, S. Saeid

AU - Kazempour, Jalal

AU - Seyedshenava, Seyedjalal

PY - 2017

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N2 - Transmission expansion planning (TEP) is a sophisticated decision-making problem, especially in an oligopolistic electricity market in which a number of strategic (price-maker) producers compete together. A transmission system planner, who is in charge of making TEP decisions, requires considering the future generation investment actions. However, in such an oligopolistic market, each producer makes its own strategic generation investment decisions. This motivates the transmission system planner to consider the generation investment decision-making problem of all producers within its TEP model. The strategic generation investment problem of each producer can be represented by a complementarity bi-level model. The joint consideration of all bi-level models, one per producer, characterizes the generation investment equilibrium that identifies the future evolution of generation investment in the market. This paper proposes a tri-level TEP decision-making model to be solved by the transmission system planner, whose objective is to maximize the social welfare of the market minus the expansion costs, and whose constraints are the transmission expansion limits as well as the generation investment equilibrium problem. This model is then recast as a mixed-integer linear programming problem and solved. Numerical results from an illustrative example and a case study based on the IEEE 14-bus test system demonstrate the usefulness of the proposed approach

AB - Transmission expansion planning (TEP) is a sophisticated decision-making problem, especially in an oligopolistic electricity market in which a number of strategic (price-maker) producers compete together. A transmission system planner, who is in charge of making TEP decisions, requires considering the future generation investment actions. However, in such an oligopolistic market, each producer makes its own strategic generation investment decisions. This motivates the transmission system planner to consider the generation investment decision-making problem of all producers within its TEP model. The strategic generation investment problem of each producer can be represented by a complementarity bi-level model. The joint consideration of all bi-level models, one per producer, characterizes the generation investment equilibrium that identifies the future evolution of generation investment in the market. This paper proposes a tri-level TEP decision-making model to be solved by the transmission system planner, whose objective is to maximize the social welfare of the market minus the expansion costs, and whose constraints are the transmission expansion limits as well as the generation investment equilibrium problem. This model is then recast as a mixed-integer linear programming problem and solved. Numerical results from an illustrative example and a case study based on the IEEE 14-bus test system demonstrate the usefulness of the proposed approach

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