Capacity withholding analysis in transmission‐constrained electricity markets

Abstract

In an oligopoly electricity market, generation companies (GenCos) are often able to exercise market power through capacity withholding. This study proposes a comprehensive approach for evaluating the capacity withholding of GenCos in the presence of network constraints in electricity markets. The Cournot-Nash equilibrium model for GenCos is considered, and then various scenarios in terms of network constraints and GenCos parameters are analysed. The purpose of this study is to propose and examine a set of comparison indices for capacity withholding assessment in transmission-constrained electricity markets. In the proposed indices, three types of electricity markets are considered: oligopoly market, perfectly competitive market, and perfectly competitive market with the nodal prices of oligopoly market. The effectiveness of the proposed indices is shown based on IEEE 30-bus and IEEE 118-bus test systems. The results demonstrate that GenCos' capacity withholding can be influenced by their parameters, network constraints, and demand elasticity.