A game theoretic modeling framework for decentralized transmission planning

Decentralized, market-driven transmission planning by self-interested entities is considered as a further step towards the liberalization of the electricity industry. However, previous approaches modeling this new paradigm make unrealistic assumptions regarding the behavior and interactions between the participating players. This paper develops a novel game theoretic model of decentralized transmission planning removing these assumptions. The decision making problem of each player is formulated as a bi-level optimization problem which is solved by converting it to a Mathematical Program with Equilibrium Constraints (MPEC). An iterative diagonalization method is employed to search for Nash Equilibria (NE) of the decentralized planning game and a heuristic approach is proposed to determine a final planning solution when no or multiple NE are reached. Case studies on a 2-node system analyze the significance of the decentralized planning solution and discuss the convergence performance of the proposed iterative approach.

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