Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/18389
Title: Modeling and analysis of strategic forward contracting in transmission constrained power markets
Authors: Yu, CW
Zhang, SH
Wang, X
Chung, TS
Keywords: Equilibrium problem with equilibrium constraints (EPEC)
Nonlinear complementarity method
Power market
Strategic forward contracting
Issue Date: 2010
Publisher: Elsevier Science Sa
Source: Electric power systems research, 2010, v. 80, no. 3, p. 354-361 How to cite?
Journal: Electric Power Systems Research 
Abstract: Taking the effects of transmission network into account, strategic forward contracting induced by the interaction of generation firms' strategies in the spot and forward markets is investigated. A two-stage game model is proposed to describe generation firms' strategic forward contracting and spot market competition. In the spot market, generation firms behave strategically by submitting bids at their nodes in a form of linear supply function (LSF) and there are arbitrageurs who buy and resell power at different nodes where price differences exceed the costs of transmission. The owner of the grid is assumed to ration limited transmission line capacity to maximize the value of the transmission services in the spot market. The Cournot-type competition is assumed for the strategic forward contract market. This two-stage model is formulated as an equilibrium problem with equilibrium constraints (EPEC); in which each firm's optimization problem in the forward market is a mathematical program with equilibrium constraints (MPEC) and parameter-dependent spot market equilibrium as the inner problem. A nonlinear complementarity method is employed to solve this EPEC model.
URI: http://hdl.handle.net/10397/18389
DOI: 10.1016/j.epsr.2009.09.019
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