Transmission constraints impacts on monopolistic production capacity under strategic bidding

Abstract

In power systems, transmission network constraints and losses can introduce gross distortions in the market for electrical energy. Congestion occurs frequently in weakly connected networks and may split a market into regions unable to compete properly with each other. The oligopoly structure of the market and the network constraints may produce results far from the perfect competition. This may cause lack of cheap energy in some areas and surplus in others. Consideration of market power caused by congestion is the main aids of our paper. We have used a methodology in order to evaluate any events that are suspected to have any relation to the market power. Since some participants have the ability to raise prices without losing market share, we should identify them and determine the amount of this energy. Bidding strategies, such as withholding capacity and bidding at higher price, influence the network and cause transmission congestion. The methodology was tested on IEEE 30 buses standard system by some indices such as HHI and Lerner index, finally the results of identification have been confirmed. For this simulation MATPOWER version 3.2 was used as OPF solver using both AC and DC power flow representation.