Modeling Market Power of Coal-fired Gencos Considering Capacity Withholding

This paper proposes a bi-level optimization model for the ex-ante analysis of tacit collusion incentives and market power abuse among coal-fired generation companies (Gencos) and natural gas-fired Gencos in transmission-constrained markets. The upper-level problem derives the power portfolio strategy of collusion parties through capacity withholding. The market clearing problem restricted by transmission constraints is formulated at the lower level. Two new market power indices are introduced to evaluate the collusion profitability and possibility. A case study of the IEEE 39-bus test system under multiple system scenarios is presented with the implementation of the geographical stochastic matching. The numerical results demonstrate the impact of geographic location and system operation states on the incentives of tacit collusion and market power exercise.