Simulation-Optimization Model to Derive Operation Rules of Multiple Cascaded Reservoirs for Nash Equilibrium

Operation rules are commonly used to make decisions for cascaded hydropower reservoirs for profit maximization, given the energy price of current and future periods. For large-scale cascaded hydropower reservoirs whose decisions can affect market price, the operation optimization models are transformed into game models to get Nash equilibriums. For market competition of multiple cascaded hydropower reservoirs, a multiplayer game model is established in which the actions are storage energy based operation rules and the payoff function values are simulated profits of cascades using the rules. The game model is solved using a successive low dimensional search method in which only one parameter of the rules is optimized at each step. The proposed method is tested using data of three cascaded reservoirs in Southwestern China in a hypothetical pure hydropower market. Results show the effect of different kind of models on rule curves and the potential impact of market reformation to the operation of the cascaded hydropower reservoirs. For the studied cascaded reservoirs, the profit increasing percentages can be 2.6%-3.9% with 0.5%-2.0% energy losing, comparing the game model to the energy maximization model.