A game theoretic model for strategic maintenance and dispatch decisions

Maintenance decisions in an oligopolistic market attains a strategic dimension because gencos are often able to manipulate market prices through capacity withdrawal. A closely related issue is that of strategically withholding generation from available capacity. An analytic framework is presented that enables joint evaluation of maintenance and generation strategies. The Cournot-Nash equilibrium (CNE) concept is extended for intertemporal decision making on maintenance and generation for multiple gencos. Each Genco maximizes its profit by strategically putting its capacity on maintenance as well as withholding generation from available capacity, taking into account its rival gencos decisions. The CNE problem is posed as a continuous, or mixed integer, nonlinear programming optimization problem. Duality theory is employed to derive insights about the marginal profit that a genco may earn from an increment in its availability in an oligopolistic market setup. Illustrative numerical examples are presented of CNE maintenance and generation strategies and these are compared and contrasted against those of a perfectly competitive scenario.