Abstract :
This paper presents a new analytical solution method for Supply Function
Equilibrium-based (SFE) bidding strategy in electricity markets. It is assumed that
every Generation Company (GenCo) has some generation units and bids a Linear Supply
Function (LSF) for each of its units to the Independent System Operator (ISO). The
problem is modeled as a bi-level optimization problem; in the inner level, ISO clears the
market to maximize social welfare; in the outer level, each GenCo tries to maximize its
individual welfare. The proposed method is used to solve the outer-level problem using
an iterative algorithm, in which LSF coecients are parameterized. The formulation is
developed for both elastic and non-elastic demands for single- and multi-generator cases
and also for integrated energy and Spinning Reserve (SR) markets with three models of
competitions: a-, b-, and k-parameterization. Three sample networks are used to evaluate
the proposed method. The results show that the proposed method is e ective and accurate
for GenCosʹ strategic bidding in electricity markets compared with other optimization
algorithms
