Linear complementarity models for transmission markets

In this paper, an equilibrium framework for markets for financial transmission rights is presented. The proposed framework considers the multi-agent nature of a transmission-right market where all participants are trying to maximize their goals simultaneously. This multi-agent problem is defined in terms of market-equilibrium conditions for every entity that participates in the transmission market. The set of equilibrium conditions is then defined as a complementarity problem. Under this framework, FTRs obligation are modelled for one-period, multi-period and multi-round markets. The models are illustrated by a three-node system and then extended to a thirty-node system using a DC-network approximation.