The portfolio analysis of electricity market with transmission constraints

In this paper, we define the portfolio of a generation company as the coordination of a set of generation units, which differ in production cost, capacity, and geographical location. A portfolio allows a generation company to coordinate its generators to bid strategically to earn profit more than what can be achieved without coordination. In a constrained transmission network, for example, a generation company can raise the electricity prices at a particular zone by congesting the inbound transmission lines through importing electricity from neighboring zones where other cheaper generation units of the company located. Understanding generation companies´ bidding behaviors under such situation is therefore crucial to ensure market fairness. In this paper, we use an agent-based approach to model the electricity market as a multi-player game and investigate how the transmission capacity and installed capacity of generation companies affect their bidding strategies under both a monopoly market and a non-monopoly market. We demonstrate conditions under which generation companies will prefer a coordination strategy over a non-coordination one.