Strategic Bidding in Regional Electricity Markets: Alternative Approach using Mixed Complementarity Problems

R. RUBIO-BARROS; O. AÑÓ; A. F. PORRAS

Quito

Conferencia; Innovative Smart Grid Technologies Latin America (ISGT LATAM), 2017 IEEE PES; 2017

Institute of Electrical and Electronics Engineers Inc.

The increase of the social welfare and the exchange of resources are the typical results obtained from regional electricity integration. However, the agents participation in the regional markets use to be through the intermediation of national operators of each country (partaker) due to the regulatory prerogatives that these operators may have. Then, oligopolistic competition could prevail in regional markets, and therefore national operators could adopt a strategic behavior. Under this context, this article presents a Mixed Complementarity Problem (MCP) approach, based on Stackelberg competition model, to define a strategy to increase the social welfare of an area or country within the regional market. The methodology has been implemented in a test system and their results are contrasted with those obtained in a perfect competition environment. It is shown that the managing of transmission lines capacity plays a key role in the exercise of market power in a regional market.