Modeling Strategic Forward Contracting in Transmission Constrained Power Markets

摘要

Taking the effects of transmission network into account, strategic forward contracting induced by the interaction of generation firms' strategies in the spot and forward markets is investigated. A two-stage game model is proposed to describe generation firms' strategic forward contracting and spot market competition. This two-stage model is formulated as an equilibrium problem with equilibrium constraints (EPEC), in which each firm's optimization problem in the forward market is a mathematical program with equilibrium constraints (MPEC) with a parameter-dependent spot market equilibrium as the inner problem. A nonlinear complementarity method is employed to solve this EPEC model. A numerical example is used to verify the effectiveness of the proposed modeling and solution method.