Transmission constrained linear supply function equilibrium in power markets: method and example

In this paper, the necessary condition of transmission constrained linear supply function equilibrium (SFE) in hour-ahead power market is induced using optimal power flow sensitivity analysis, and an original iterative method for computing it is presented. The computational results of the new method are accurate enough compared with those of the straightforward numerical method for computing Nash equilibrium, and the computational task is considerably reduced. Through analyzing the computational results, we find there are usually three SFE states changing from one to another when loads vary, and come to a conclusion about the SFE state-changing pattern. In addition, we gain an insight into the effects of transmission constraints imposing on the strategic behavior of the market participants. It is expected that the superiority of handling transmission constrains will make the method a promising one for analyzing the gaming characteristics unique to power market.