Hydrothermal producer offering strategy in a transmission-constrained electricity market: An MPEC approach

This paper presents an optimal offering strategy for a strategic producer who owns thermal and hydro generating units in a transmission-constrained day-ahead electricity market. The optimal offering strategy problem is formulated as a bi-level optimization problem, which is converted to a Mixed-Integer Linear Programming (MILP) model using the Karush-Kuhn-Tucker (KKT) optimality conditions and the strong duality theory. An innovative feature of the proposed model is the incorporation of the transmission network modeling into the ISO market clearing algorithm under the Power Transfer Distribution Factor (PTDF) formulation. Test results on the IEEE Reliability Test System demonstrate the benefits of incorporating the transmission network modeling into the Producer´s offering strategy problem.