A unit commitment based-co-optimization of generation and transmission expansion planning to mitigate market power

Abstract

• A unit-commitment-based generation and transmission expansion planning model is proposed. • The planning problem is subject to the market power's constraint. • The scenario-based model is structured as a mixed-integer bi-level programming (MIBP). • The lower-level problem computes the must-run generation (MRG) as a market index. • An exact algorithm using the reformulation-and-decomposition technique is utilized to attain the optimal solution. This paper aims to construct a novel strategy for coordinated generation and transmission expansion planning (CGTEP) considering market power. The integrated model constitutes bi-level programming from a centralized planning point of view. The upper level seeks to minimize the investment and operation cost subject to technical constraints, while the lower level's objective is to mitigate the market power. A stochastic unit commitment-based approach is employed at the upper level to find the least-cost solution and at the lower level to minimize the transmission-constrained market power index. Since the lower level contains integer variables, it is impossible to utilize the Karush-Kuhn-Tucker (KKT) conditions or duality theory (DT) to convert the bi-level problem into a single level. Hence, an exact algorithm using the reformulation-and-decomposition technique (RDT) is utilized to attain the optimal solution to this complex mixed-integer bi-level programming (MIBP) problem. The IEEE 118-bus electric power network is used for numerical studies. Results from the numerical studies signify the effectiveness of the presented model showing that a well-designated power system can significantly mitigate market power.