Introduction of regulatory criteria in the self-UC model

Abstract

In liberalized markets, agents are expected to maximize their profits. Such behavior does not require additional considerations if it occurs in an environment of perfect competition. However, there may be dominant players in markets where the number of participating agents is small, as in the electricity market. Specific regulations are implemented to limit possible strategic behaviors, which the Generation Companies (GenCos) must consider when planning their operation. If such behaviors were allowed in models, their utility as planning tools would be lost as their results would deviate from expected market outcomes where compliance with regulation is needed. In this paper, we propose the additional constraints that should be applied to the income of individual generation units in a profit maximization model.The mathematical formulation is detailed, and a case study is presented to show the advantages of the proposed model.