Integrating Transmission Planning, Generation Investment, and Market Operation Decisions in a Model

Abstract

Based on a previous paper by Sauma and Oren, we formulate a variant of the proactive network planning model, which uses the marginal theory to clear a perfectly competitive electricity market. The equilibrium model characterizes the competitive interaction among generation firms whose decisions in generation capacity investments and production are affected by both the transmission investments and the market operation. Moreover, we also consider production costs that are inversely proportional to the installed capacity. We illustrate our results using a 3-node network example.