Security-Constrained generation and transmission expansion planning based on optimal bidding in the energy and reserve markets

The increasing growth of power system demand causes different challenges for the network operation and security situation. Therefore, this paper presents security-constrained generation and transmission expansion planning (SCGTEP) according to a strategic bidding model in the energy and reserve markets. This method includes a bi-level optimization problem, where its upper level refers to the transmission company (TransCo) and generation company (GenCo) economic model. This level minimizes the difference between TransCos and GenCos costs and revenues in the energy and reserve markets subjected to allowed investment budget for transmission lines and generation units. Moreover, the lower level problem considers the energy and reserve market-clearing model based on AC security-constrained optimal power flow. In other words, this problem minimizes the summation of network operation and security costs limited to the linearized AC optimal power flow equations, reserve formulation of generation units, load shedding model due to N – 1 contingency, and linearized voltage stability constraints. In the next step, the single-level SCGTEP is achieved using the Karush-Kuhn-Tucker, and it is solved by the Benders decomposition approach to obtain an optimal solution at a low calculation time. This strategy includes the uncertainties of load, renewable generation power, and the availability of the network equipment, hence, scenario-based stochastic programming is used in this paper to model uncertain parameters. The proposed SCGTEP is tested on the 6-bus and 118-bus IEEE networks in the GAMS software. According to the obtained numerical results, the proposed strategy can be simultaneously improved operation and security indices about 34.5% and 100%, respectively, compared to the power flow analysis based on the optimal location of generation units and transmission lines. Also, GenCos and TransCos can clear their investment cost after 5 years with participation in the electricity market.