Mathematical modeling and simulation of the impact of system's constraints on IPP's bidding strategies

We investigate the impact of systems' constraints (generation and transmission) and of demand elasticity on independent power producers' (IPPs) market strategies. An analytical model, which is an extended Cournot model derived from the classical Cournot model, has been developed. Simulation results obtained with the authors' extended Cournot model are compared with results obtained with an industrial-grade software package (Plexos) are compared and analyzed. The simulation results show that, with the consideration of systems' constraints, some of the IPPs could obtain higher profits through capacity withholding.