Wind Power Investment in Electricity Markets Consisting of Strategic Producers and Elastic Demand

In this paper, a novel framework is proposed to solve wind power investment in incomplete electricity markets in the presence of strategic companies and considering elastic demand. In the proposed framework, the main objective is to investigate the profitability of wind units in oligopolistic power markets where consumers has good elasticity versus electricity price. The considered investment problem is represented as a bilevel model where investment decisions are taken at upper level with the aim of maximizing investment profit, and market clearing problem in the lower level. According to oligopolistic feature of market, Cournot game is applied for modeling strategic interactions among market players. Thus, market equilibrium is determined by maximizing generation companies’ (GENCOs) profit considering balance of supply and demand. Uncertainty of wind power production is modeled with a set of scenarios. Upper problem are solved using genetic algorithm, while the lower level problem is solved by mathematical algorithm for various scenarios of wind power. The proposed model is examined on a three-bus network and on IEEE 30 bus network.