A Bilevel Stochastic Optimization Framework for Market-Oriented Transmission Expansion Planning Considering Market Power

Khalid A. Alnowibet (), Ahmad M. Alshamrani and Adel F. Alrasheedi
Additional contact information
Khalid A. Alnowibet: Statistics and Operations Research Department, College of Science, King Saud University, Riyadh 11451, Saudi Arabia
Ahmad M. Alshamrani: Statistics and Operations Research Department, College of Science, King Saud University, Riyadh 11451, Saudi Arabia
Adel F. Alrasheedi: Statistics and Operations Research Department, College of Science, King Saud University, Riyadh 11451, Saudi Arabia

Energies, 2023, vol. 16, issue 7, 1-15

Abstract: Market power, defined as the ability to raise prices above competitive levels profitably, continues to be a prime concern in the restructured electricity markets. Market power must be mitigated to improve market performance and avoid inefficient generation investment, price volatility, and overpayment in power systems. For this reason, involving market power in the transmission expansion planning (TEP) problem is essential for ensuring the efficient operation of the electricity markets. In this regard, a methodological bilevel stochastic framework for the TEP problem that explicitly includes the market power indices in the upper level is proposed, aiming to restrict the potential market power execution. A mixed-integer linear/quadratic programming (MILP/MIQP) reformulation of the stochastic bilevel model is constructed utilizing Karush−Kuhn−Tucker (KKT) conditions. Wind power and electricity demand uncertainty are incorporated using scenario-based two-stage stochastic programming. The model enables the planner to make a trade-off between the market power indices and the investment cost. Using comparable results of the IEEE 118-bus system, we show that the proposed TEP outperforms the existing models in terms of market power indices and facilitates open access to the transmission network for all market participants.

Keywords: bilevel programming; KKT conditions; market power; mixed-integer linear/quadratic programming; stochastic programming; transmission expansion planning (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/1996-1073/16/7/3256/pdf (application/pdf)
https://www.mdpi.com/1996-1073/16/7/3256/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:16:y:2023:i:7:p:3256-:d:1116501

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().