Numerical study of affine supply function equilibrium in AC network-constrained markets

An affine supply function equilibrium (SFE) approach is used to discuss voltage constraints and reactive power issues in the modeling of strategic behavior. Generation companies (GenCos) can choose their bid parameters with no restrictions for both energy and spinning reserves. The strategic behavior of generators is formulated as a multi-leader single-follower game. Each GenCo is modeled as a leader, while the central market operator running a cost minimization process is the sole follower. An ac model is considered to represent the transmission system. A three-node system is used to illustrate several cases, and study the implications of the incentives of the strategic players to exploit active and reactive power, and spinning reserves in order to maximize profits. Results for a 14-node system are also presented.