An oligopoly electricity competition model with probabilistic inflow & demand representations

The paper presents a Nash-Cournot equilibrium model for analyzing wholesale electricity market competition among generation companies owning a mixture of hydrothermal power generation facilities. The problem is formulated as a set of individual profit maximization models and solved using the mixed complementarity programming (MCP) method. The impact of strategic behavior by both hydro and thermal generation owners on competition is investigated. The model accounts for uncertainty in inflow and demand via a probabilistic method coupled with a probability space reduction technique for large problems. The results show that the algorithm proposed in this paper is efficient and robust.