This paper introduces a two-level stochastic linear programming (LP) generation expansion planning (GEP) framework that actively incorporates the endogenous retirement of aging power plants, multi-firm competition, strict reserve-margin requirements, and ex-post assessments of market power. To address supply deficits under uncertain future demand, the Level 1 optimization model guarantees long-term system adequacy and minimizes structural market power, while respecting firm-specific investment budgets and the physical lifespans of existing generating units. By implementing a capacity penalty alongside a mandatory 15% peak demand reserve margin, the framework prevents unrealistic overbuilding and mathematically ensures overall grid reliability. Once the optimal capacity investments are identified, the Level 2 model simulates an economic dispatch program to derive competitive market-clearing prices and calculates the residual supply index (RSI) for each firm. A 30-year case study—featuring gas turbine, combined-cycle, and nuclear technologies managed by three competing firms—demonstrates the practical application of this framework. The results highlight a steady retirement of legacy plants matched by new investments, successfully sustaining the 15% reserve margin while keeping the RSI above 1.0 to prevent any firm from becoming a pivotal supplier. Ultimately, integrating plant lifecycles with structural competition metrics provides a highly robust GEP solution, offering regulators a practical tool to evaluate long-term resource adequacy and market concentration simultaneously.

Keywords

Generation Expansion Planning, Competition, Retirement, Stochastic Linear Programming, Market Power.