Impact of Transmission Constraints on Supply-Side Bidding Strategy Using BLP Approach

This paper presents an approach to develop an optimal bidding strategy for a generation company (GenCo) in the network constrained electricity markets. A bi-level programming (BLP) technique is formulated in which upper level problem represents an individual generating company (GenCo) payoff maximization and the lower level represents the independent system operator's (ISO) market clearing problem for minimizing consumers' payments. The objective function of BLP problem used for bidding strategy by economic withholding is highly nonlinear, and there are complementarity terms to represent the market clearing. This approach is applied to find the optimal bidding strategy of a GenCo competing with five GenCos in IEEE 30-bus test system. Opponents' bidding behavior is modeled with probabilistic estimation. The impact of network constraints and opponents bidding behavior on bidding strategy of a GenCo have been analyzed in four simulation cases to show the effectiveness and robustness of the proposed algorithm.