A game-theoretic model for generation expansion planning: problem formulation and numerical comparisons

Abstract

This paper presents an application of noncooperative game theory to generation expansion planning (GEP) in a competitive electricity industry. We apply the Cournot model of oligopoly behavior to formulate a GEP model that may characterize expansion planning in a competitive regime, particularly in pool-dominated generation supply industries. Numerical experiments are conducted on a test system to analyze generation investment and market participation decisions of candidate expansion units that vary in costs and forced outage rates. The numerical results point to: 1) greater industry expansion and system reliability, under Cournot competition than under centralized expansion planning; and 2) higher probabilistic measures of reliability from multi-player expansion than from expansion by a traditional monopolist with an equivalent reserve margin requirement. Furthermore, we summarize analytical results involving a simplified version of the GEP game.

Network-constrained Cournot models of liberalized electricity markets: the devil is in the details

“…However, a few multistage dynamic Cournot models have been formulated that also include investments in new plants as strategic variables, although transmission constraints are disregarded. An open-loop dynamic model is presented by Chuang et al (2001), while Murphy and Smeers (forthcoming) propose a closed-loop model. Nash games in other types of strategies have also been modeled in transmission constrained markets, including games in prices (Hobbs and Schuler, 1985) and games in supply functions, in which each firm submits a schedule of the quantities it is willing to deliver under different prices.…”

Wind power investment within a market environment

“…Most of them tackle the generation investment problem for conventional sources [3][4][5][6][7][8][9]. However, wind power investment analysis requires models rather different than those used in investment problems involving conventional sources.…”

Impact ofCO2cap-and-trade programs on restructured power markets with generation capacity investments

“…The structure of our game theoretic model to analyze the impact of CO 2 cap-and-trade programs on restructured electricity markets is similar to the structure of capacity expansion models (without CO 2 emissions considerations) that were presented to the literature, such as [19,20]. In [19], the competition of generators is modeled using Cournot theory of oligopoly.…”

“…In [19], the competition of generators is modeled using Cournot theory of oligopoly. Generators decide on how much capacity to expand, new entries are not allowed, and the expansion decisions are made simultaneously by all competitors.…”