A Bilevel Electricity Market Equilibrium Model Considering GENCO's Optimal Investment and Bidding Decision

This paper proposes a bilevel optimization model to find the equilibrium of an electricity market where each GENeration COmpany (GENCO) takes the optimal investment and bidding decision. The upper level determines the optimal investment and bidding strategy of each GENCO, while the lower level represents the market clearing process. One highlight of this paper is that both fuel-fired and renewable generators are considered in the model. Although the proposed model is too complicated to solve, based on some relaxation assumptions, it can be reformulated to a trilevel model and solved by the primal-dual method. The proposed model and solution technique are tested in IEEE 14-bus system.