Investigation of Gencos’ optimal bidding strategies in oligopolistic power markets

In electricity market with system constraints and limited number of producers, Generation companies (Gencos) are facing an oligopolistic competition market rather than full competitive market. In this market each Genco can increase its own profit through strategic bidding. This paper investigates the problem of developing optimal bidding strategies of Gencos considering participants´ different behaviours and transmission constraints. The problem is modeled as a bi-level optimization that considers Gencos´ profits and system dispatch as well. The objective of proposed optimization model is to generate optimal bidding strategies for Gencos, while satisfying transmission constraints. Impact of optimal bidding strategies of Gencos on system nodal prices and corresponding payoffs are studied. Furthermore effect of exercising market power due to irrational bidding of strategic generators on system Nash equilibrium point is presented. Finally IEEE-30 bus test system is used for case study to demonstrate simulation results.