A Three-Level Static MILP Model for Generation and Transmission Expansion Planning

We present a three-level equilibrium model for the expansion of an electric network. The lower-level model represents the equilibrium of a pool-based market; the intermediate level represents the Nash equilibrium in generation capacity expansion, taking into account the outcomes on the spot market; and the upper-level model represents the anticipation of transmission expansion planning to the investment in generation capacity and the pool-based market equilibrium. The demand has been considered as exogenous and locational marginal prices are obtained as endogenous variables of the model. The three-level model is formulated as a mixed integer linear programming (MILP) problem. The model is applied to a realistic power system in Chile to illustrate the methodology and proper conclusions are reached.