Nash Equilibrium in Competitive Electricity Market Considering Congestion

Pricing has turned into a highly significant matter for suppliers and their customers since deregulation has been realized in the electrical industry and many countries have revised the structure of their electrical energy market by defining different competition levels in generation, transmission and distribution. In the current paper, a proposed algorithm based on games theory has been used for analyzing economic behavior of generators for pricing in an instantaneous electrical energy market. This algorithm is then applied on the studied system in two states without considering congestion, and considering congestion. Effect of congestion on players’ pricing strategy is discussed and emergence of market power is also demonstrated. The 9-bus IEEE system is used for illustrating features of the respective algorithm. Keywords— Pricing, Nash Equilibrium, Optimal Load Distribution, Games Theory.