Competition driven bi-level supply offer strategies in day ahead electricity market

This paper investigates a competition driven supply offering strategies to meet a given demand in day ahead electricity markets. The supplier's objective is to maximize profit share by exercising strategic bidding, while market operator aims at minimizing the overall system cost. Game theoretic approach is leveraged to frame the optimization and solve the associated Karush Kuhn Tucker (KKT) optimality as necessary and sufficient conditions. The transmission capacity congestion even allows expensive suppliers to exercise market power and the existence of Nash equilibrium is jeopardized leading to the suboptimal market outcomes. System without transmission constraints with lower demand leads to Nash equilibrium in terms of generation payoff.