A nodal capacity market for co-optimization of generation and transmission expansion

The paper provides a formulation of the generation and transmission expansion problem which incorporates resource adequacy assessment into the stochastic optimization framework. The system expansion problem is considered as an auction resolved through a stochastic mixed integer linear problem in which generation and transmission expansion offers are explicitly identified on the electrical grid modeled using linearized DC SCOPF. In this formulation, locational resource adequacy indicators are derived as dual variables: shadow prices for reliability limiting transmission facilities and Locational Reliability Prices. The paper demonstrates that the auction can identify an optimal mix of generation and transmission expansion offers which guarantees resource adequacy of the system at least costs. Moreover, the problem of transmission cost allocation is resolved through the market pricing mechanism. The paper extends the results of [1] by incorporating transmission expansion options. A novel technique of modeling flexible transmission topology using flow-cancelling transactions [2] is applied.