Transmission expansion for profit maximization of generators in a decentralised market structure

This paper presents a transmission expansion formulation that maximizes the profits of the generators in a decentralized market structure. Transmission expansion of congested lines increases the dispatch by the generators and hence the generator surplus. The generators profit is the difference in surplus and the transmission congestion charges. Previous work on profit maximization was a simple quadratic formulation as the transmission charges were taken as fixed investment costs. In this paper, transmission congestion charges are based on the difference in spot market locational marginal prices. To ensure that transmission merchants always profits from expansion, the transmission congestion charges are modeled as several blocks of congestion prices and transmission capacities. The profitable transmission expansion for generators is thus formulated as a mixed integer (0-1) quadratic programming problem. Examples are provided to explain the method.