Generation Plan Liberalization Scheme: A Method Based on Multi-objective and MPEC

Planned electricity (as opposed to market electricity) plays an important role in China’s electricity market reform process. This article provides a multi-objective and mathematical programs with equilibrium constraints (MPEC) based method for power generation plan liberalization from power grid company’s perspective. As a decision maker, power grid companies pursue their own profit maximization and consider the market survival of high-cost units. The weighted method is used to transform the multi-objective to a single objective. The proposed method combines power grid company decision and power market clearing together, through the bilevel optimization approach to make the liberalization scheme can satisfy the power grid companies own profit maximization as well as the market existence problem of high-cost units. An illustration case is designed to show how the method works. At the same time, different parameters also be simulated. Case study shows that the proposed method can help power grid companies to make the decision of power generation liberalization scheme according to its preference. At last, the conclusion of the example analysis and the prospect of the future research are given.