Profit calculation of strategic producer

Abstract

In the deregulated electric power systems, market participants bid energy to an Independent System Operator (ISO). Every day, market participants submit bids to the ISO who then decide Market Clearing Price (MCP) and hourly generation level of each participant over a 24-hour period. In regions such as New England, utility bids part of energy and self-schedules the rest, whereas an Independent Power Producer (IPP) bids all its energy. For each participant, bidding strategies should be selected to maximize its individual welfare. The strategic bidding relies on the bi-level problem whose upper level problem represents profit maximization of strategic producer while the lower level problem represents total system cost minimization. This paper proposed conversion of bi-level bidding problem into a single level bidding minimization problem. The new single level minimization problem incorporating transmission constraints, operating limits and ISO market clearing function is solved using a robust population based algorithm, GSO (Group Search Optimizer). Experimental investigation is carried out on IEEE 14 bus system and the simulation results represent the profits of strategic producer which are compared with profits of non-strategic producers.