The Transactions of The Korean Institute of Electrical Engineers (전기학회논문지)

The Korean Institute of Electrical Engineers (대한전기학회)
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Suppression of Strategic Capacity Withholding by Capacity Payment in a Competitive Generation Market

경쟁적 전력시장에서 용량요금에 의한 전략적 용량철회 억제

  • Published : 2007.07.01
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Abstract

In a cost based pool market, the generation capacity can be used as strategic bids by generation companies (Gencos) with the cost functions open to the market. Competition using strategic capacities is modeled by Cournot and Perfect Competiton (PC) model, and transformed into two by two payoff matrix game with Gencos' decision variables of Cournot and PC model. The payoff matrices vary when capacity payments are given to Gencos in accordance with their capacity bids. Nash Equilibrium (NE) in the matrices also moves with capacity price changes. In order to maximize social welfare of the market, NE should locate in a certain position of the payoff matrices, which corresponds to a PC NE. A concept of a critical capacity price is proposed and calculated in this paper that is defined as a minimum capacity price leading to PC NE. The critical capacity price is verified to work as a tool for suppressing a strategic capacity withholding in simulations of a test system.

Keywords

References

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