Generation expansion planning in the competitive environment

This paper presents the Generation Expansion Planning (GEP) problem in a competitive environment. In the competitive market, each power producing companies are called as GENerating COmpanies (GENCOs) and they compete with each other to maximize their own profits. But the objective of the regulatory body is to stabilize the market through coordination between GENCOs by providing long term market information to GENCOs, which prevents extreme over/under investments in the electricity market. The regulatory body is also responsible for optimal generation capacity, while considering system security, national security (fuel mix ratio), social welfare and reserve margin. In this paper, the GEP problem is solved with a realistic test system comprising of 5-GENCOs. Each player performs self-optimization using Particle Swarm Optimization (PSO) technique, assuming the strategies of other players are fixed. The competitive GEP problem is solved iteratively by self-optimizing (maximizing profit) each GENCO in turn, while satisfying the constraints.