Optimal bidding strategy for all market players in a wholesale power market considering demand response programs

In a wholesale power market, generation companies (GENCOs) and distribution companies (DISCOs), as market players, try to maximize their payoffs by implementation of optimal strategies. This paper presents a method for determining GENCOs and DISCOs' optimal bidding strategies considering other participants' bidding and power systems operating conditions. It is assumed that DISCOs bid their distributed generations (DG) and GENCOs bid their generators in a day-ahead wholesale energy market. Meanwhile we assume that DISCOs bid interruptible loads (ILs) in market on behalf of their end customers. The proposed methodology is modeled as a bi-level multi-objective optimization problem with the upper subproblem representing individual GENCOs and DISCOs and the lower subproblem representing the Independent System Operator (ISO). The upper level maximizes the individual market participant's payoffs and the lower one solves the ISO's market clearing problem for minimizing operation costs. Genetic algorithm (GA) and fuzzy satisfying method (FSM) are employed for solving the proposed model and determining optimal bidding strategies. An eight-bus system is employed to illustrate the proposed method. Copyright (C) 2010 JohnWiley & Sons, Ltd.