Under the current European market environment, transmission companies (TRANSCOs) have to decide network expansion by maximizing social welfare while the generation companies (GENCOs) decide their expansion with the aim of maximizing their own profit. This process, in addition to increasing penetration of renewable energy, storage and distributed generation, might create contradictory incentives, which represent a rupture between short and long-term signals. Therefore, this paper proposes a bi-level formulation for the generation and transmission coordination problem (GEPTEP). We consider a proactive framework in which a centralized TRANSCO represents the upper level while the decentralized GENCOs, that trade in the market, represent the lower level. As a novel feature, a representative period framework is employed, which allows us to consider operation of in both short and long-term storage technologies. A case study is presented to compare the results between a one-level cost minimization framework and a bi-level proactive framework.
Published: April 2018.