A Hierarchical Framework for Long-Term Power Planning Models

In this paper, we formulate a long-term planning model of transmission line expansion based on balancing investment cost and reducing consumer cost. We achieve this by formulating a hierarchical framework that is sensitive to different agents operating on different timelines, the relationships of which may be competitive, cooperative or somewhere in between. The advantage of this framework is that while it captures the complexity of long-term decision making, it maintains clarity of information flow between models, agents and timelines. For our purposes, we introduce an equilibrium model that combines grid operational concerns with the short-term competitive behavior of generation firms. An iterative solution technique is proposed to provide a Nash solution where each optimization problem is solved globally. This solution is then used to inform an overarching transmission planning model that we solve using derivative-free optimization. Using a de-congested network as a benchmark, numerical results indicate a non-alignment of the objectives of planning and operational entities, whereby easing line congestion may not offer monetary benefits to the wholesale consumer.