Coordinated planning of generation capacity and transmission network expansion: A game approach with multi‐leader‐follower

Summary This paper provides a novel structure to coordinate decentralized expansion planning of generation capacity and transmission grid in which both generation and transmission sectors of power system is deregulated. The problem forms a Stackelberg bilevel game with multileaders and multifollowers. In this hierarchical game at the upper problem, generating companies make their strategic decisions to maximize their profit and at the lower problem, the transmission companies' strategic behaviors are formulated. Also, both upper and lower level problems, themselves, fall into the form of a bilevel optimization problem in which in the first level the utilities' profit maximization is formulated, while the second level formulates the electricity market clearing process. These 2 bilevel problems at upper and lower level are handled by Karush-Kuhn-Tucker (KKT) conditions. Finally, the formulated multi-leader-follower game is solved using diagonalization method. The results obtained show that the effectiveness of the proposed planning framework.