Optimal Fuel, Power and Load-Based Emissions Trades for Electric Power Supply Chain Equilibrium

This paper proposes a model to determine equilibrium fuel, power, and emissions trades in an electric power supply chain (fuel/generation/transmission/distribution/consumption) framework with a load-based (LB) emissions trading program. The model represents the oligopolistic gaming behavior of generation companies (Gencos) and load serving entities (LSEs), and equilibrium conditions for fuel, power, and emissions allowance markets which are integrated through endogenous prices. The model is solved by using a practical heuristic method based on the Fisher-Burmeister nonlinear complementarity function (NCP) and smoothing technique. An application to a four-node system with three Gencos and LSEs is also presented to illustrate the effects of emission allowances trading, renewable energy generation and network congestion on equilibrium solutions.