A Mixed Integer Linear Programming Model to Regulate the Electricity Sector

This paper introduces the concept of market design and make the distinction between the three different levels of market design such as industry structure, wholesale and marketplace design. We present a mixed-integer linear programming (MILP) model for the optimal long-term electricity planning of the Greek wholesale generation system. In order to capture more accurately the technical characteristics of the problem, we have divided the Greek territory into a number of individual interacted networks (geographical zones). In the next stage we solve the system of equations and provide simulation results for the daily/hourly energy prices based on the different scenarios adopted. The empirical findings reveal an inverted-M shaped curve for electricity demand in Greece, while the SMP curve is also non-linear. Lastly, given the simulations results, we provide the necessary policy implications for government officials, regulators and the rest of the marketers.