Abstract
This paper presents the analysis of a novel framework of study and the impact of different market design criterion for the generation expansion planning (GEP) in competitive electricity market incentives, under variable uncertainties in a single year horizon. As investment incentives conventionally consist of firm contracts and capacity payments, in this study, the electricity generation investment problem is considered from a strategic generation company (GENCO) ′ s perspective, modelled as a bi-level optimization method. The first-level includes decision steps related to investment incentives to maximize the total profit in the planning horizon. The second-level includes optimization steps focusing on maximizing social welfare when the electricity market is regulated for the current horizon. In addition, variable uncertainties, on offering and investment, are modelled using set of different scenarios. The bi-level optimization problem is then converted to a single-level problem and then represented as a mixed integer linear program (MILP) after linearization. The efficiency of the proposed framework is assessed on the MAZANDARAN regional electric company (MREC) transmission network, integral to IRAN interconnected power system for both elastic and inelastic demands. Simulations show the significance of optimizing the firm contract and the capacity payment that encourages the generation investment for peak technology and improves long-term stability of electricity markets.
Highlights
Over the last decade, due to a shear need to improve economic efficiency and promote sustainable development in electricity generation, transmission and distribution, the power systems industry has been subjected to major interventions to optimize the core structure of electricity markets and its regulation [1,2,3,4,5,6,7]
The effect of investment incentives and different electricity markets has been examined on a generation capacity expansion criterion, as from a strategic generation company (GENCO) perspective under uncertainties in a single year horizon, which is eligible for the electricity market above, such as: the energy only (EO), capacity payments (CP), firm contract (FC) and smart hybrid (SH)
The bi-level optimization solutions proposed above are converted into a single-level optimization solution by using the karush kuhn tucker (KKT) conditions of second-level [28,42], by considering an implementation of a mathematical programming with equilibrium constraint (MPEC) [29,45], which is rigorously linearized by the theoretical boundaries and principles of bigM and the strong Duality theorem and the mixed integer nonlinear problem converted to a mixed integer linear program (MILP)
Summary
Due to a shear need to improve economic efficiency and promote sustainable development in electricity generation, transmission and distribution, the power systems industry has been subjected to major interventions to optimize the core structure of electricity markets and its regulation [1,2,3,4,5,6,7]. We utilize and co-optimize the MPEC model for inter-relating the impact of both the firm contract and capacity payment on the global investment behaviour of electricity market structure In this context, the reliability indicators for different markets can be monitored and compared concurrently with each other, as this approach offers a unique adaptability to apply this method to a range of power networks. The effect of investment incentives and different electricity markets has been examined on a generation capacity expansion criterion, as from a strategic GENCO perspective under uncertainties in a single year horizon, which is eligible for the electricity market above, such as: the energy only (EO), capacity payments (CP), firm contract (FC) and smart hybrid (SH). Add-ons of reliability indicators are obtained for each year of the planning period in the proposed markets
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