Welfare-maximizing transmission capacity expansion under uncertainty and imperfect competition

Abstract

We apply the JuDGE optimization package to a multistage stochastic leader-follower model that determines a transmission capacity expansion plan to maximize expected social welfare of consumers and producers who act as Cournot oligopolists in each time period. The problem is formulated as a large-scale mixed integer program and applied to a 5-bus instance over scenario trees of varying size. We compare model results for three different cases: assuming a perfectly competitive market; considering one coal monopolist in the market; or assuming a Cournot oligopoly. This allows us to show the impact of imperfect competition on transmission expansion. We also present some computational results comparing JuDGE with solving the deterministic equivalent mixed integer program using a state-of-the-art integer programming package.