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A leader-followers model of power transmission capacity expansion in a market driven environment

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  • Paolo Pisciella
  • Marida Bertocchi
  • Maria Vespucci

Abstract

We introduce a model for analyzing the upgrade of the national transmission grid that explicitly accounts for responses given by the power producers in terms of generation unit expansion. The problem is modeled as a bilevel program with a mixed integer structure in both upper and lower level. The upper level is defined by the transmission company problem which has to decide on how to upgrade the network. The lower level models the reactions of both power producers, who take a decision on new facilities and power output, and Market Operator, which strikes a new balance between demand and supply, providing new Locational Marginal Prices. We illustrate our methodology by means of an example based on the Garver’s 6-bus Network. Copyright Springer-Verlag Berlin Heidelberg 2016

Suggested Citation

  • Paolo Pisciella & Marida Bertocchi & Maria Vespucci, 2016. "A leader-followers model of power transmission capacity expansion in a market driven environment," Computational Management Science, Springer, vol. 13(1), pages 87-118, January.
    • Handle: RePEc:spr:comgts:v:13:y:2016:i:1:p:87-118
    DOI: 10.1007/s10287-014-0223-9
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    References listed on IDEAS

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    1. Vespucci, Maria Teresa & Innorta, Mario & Cervigni, Guido, 2013. "A Mixed Integer Linear Programming model of a zonal electricity market with a dominant producer," Energy Economics, Elsevier, vol. 35(C), pages 35-41.
    2. Enzo Sauma & Shmuel Oren, 2006. "Proactive planning and valuation of transmission investments in restructured electricity markets," Journal of Regulatory Economics, Springer, vol. 30(3), pages 358-387, November.
    3. Pozo, David & Contreras, Javier & Sauma, Enzo, 2013. "If you build it, he will come: Anticipative power transmission planning," Energy Economics, Elsevier, vol. 36(C), pages 135-146.
    4. Hyman, Leonard S., 2010. "Restructuring electricity policy and financial models," Energy Economics, Elsevier, vol. 32(4), pages 751-757, July.
    5. Enzo Sauma & Shmuel Oren, 2006. "Proactive planning and valuation of transmission investments in restructured electricity markets," Journal of Regulatory Economics, Springer, vol. 30(3), pages 261-290, November.
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    Cited by:

    1. Thomas Kleinert & Martin Schmidt, 2023. "Why there is no need to use a big-M in linear bilevel optimization: a computational study of two ready-to-use approaches," Computational Management Science, Springer, vol. 20(1), pages 1-12, December.

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