Merchant Transmission Expansion Planning Considering Wind Power Penetration Level

The trend towards deregulation in energy systems creates the opportunity for independent self-interested merchants to invest in transmission lines, which is decoupled from other participants of energy systems. This paper presents a bilevel Stackelberg game model for merchant transmission expansion planning considering different levels of wind penetration. In the upper-level problem, an independent investor determines transmission line investments strategically with the aim to maximize its own profits. The merchant line investment is compensated by the financial transmission right (FTR) of installed lines. At the lower level, the centralized system planner clears the energy market to minimize the total operation cost. To solve the bilevel model, we first reformulate the bilevel model into a mathematical program with equilibrium constraints (MPEC). Then, the MPEC is linearized to obtain a solvable mixed-integer linear program (MILP). The presented planning method is demonstrated on a modified Garver's 6-bus test case. The numerical results under different wind penetration scenarios are used to discuss the mechanism of transmission expansion planning based on FTR and the wind penetration level's impact on merchant transmission line expansion.