Derivation of a new mathematical framework for transmission system augmentation using von Stackelberg game

The market-based augmentation of the high voltage transmission systems as a legacy of the previous regulated regimes has been a challenging issue for the central transmission entities. The economic assessment framework for transmission upgrades or expansion projects, considering the interaction of the central transmission entity (CTE) with the electricity market management (MMC) company both as independent players needs to be addressed appropriately at least in the National Electricity Market, Australia.To assist in bridging this gap, this paper introduces a novel metric, namely, the L-Shape Area, for the economic assessment of the transmission expansion options. The proposed methodology employs a von Stackelberg game for the interaction modelling of the central transmission entity and the market management company. The upper subproblem minimises the objective of the CTE as the leader player and the lower subproblem solves the security-constrained economic dispatch as the follower subproblem.The bi-level programming problem has been solved by applying the Kuhn-Tucker optimality conditions to the follower subproblem and the use of a gradient search method to solve the resultant single level non-linear programming problem.A modified IEEE 14-bus test system has been used to show the effectiveness of the proposed formulation.