Mitigation of Market Power in deregulated power system using Nash Equilibrium

Market Power is one of the major issues present in deregulated power system. Some of the participants game the constraints to gain large market power which results in inefficiency, higher costs and low consumer benefit. The paper discusses the market power, its analysis and mitigation technique. Nash Equilibrium is used in this paper to mitigate the market power. Two cases are discussed in this paper; market power without transmission constraints and market power with transmission constraints. Market power with transmission constraints presents more complex situation, as one or more participants can game the constraints and can create an artificial congestion. Three generator hypothetical situation is simulated for analysis and mitigation of market power.