Generation scheduling based on two-level optimization problem

A two-level problem to electricity generation scheduling in the wholesale market environment is proposed. The lower level of the problem corresponds to System Operator (SO) efforts to schedule generation and calculate local marginal prices (LMP) on the basis of total production cost minimization. The upper level corresponds to the profit maximization of each Generating Company (GC) with true cost functions and true generation ranges. The lower level of the problem is represented as a Mathematical Program with Equilibrium Constraints (MPEC). The problem is deemed solved, when the Nash equilibrium point is reached among strategic producers. A two-level optimization problem is stated and a solution method is developed. The numerical example of a 15 bus Energy Power System (EPS) with thermal and hydro power plants is used to test the applicability of the approaches. The efficiency of the proposed approached is shown in comparison with traditional methods.