Generation expansion planning and transmission planning are strongly related. It is increasingly demanded in power industry to optimize such a generation-transmission planning so that whole power system can be operated in a more economic and reliable manner. So far most of existing methods are to either solve generation expansion planning or transmission planning due to the computational burdens, in particular for a large-scale system, and also there are no commercial packages available to solve such a problem directly. In this paper, we propose a bi-level model that divides the original problem into a master problem and two sub-problems. Optimization for such bi-level model is facilitated by using the long-term nodal marginal costs, which is acted as economic signals for the master problem and the sub-problems. To demonstrate the proposed method, we adopt several test systems, which verify the effectiveness of the proposed algorithm.
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