Short- and long-term Nash equilibria in electricity markets

Javier Contreras, David Pozo

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

4 Citations (Scopus)

Abstract

In competitive electricity markets, companies simultaneously offer their productions to obtain the maximum profits on a daily basis. In the long run, the strategies utilized by the electric companies lead to various long-term equilibria that can be analyzed with the appropriate tools. We present a methodology to find plausible long-term Nash equilibria in pool-based electricity markets. The methodology is based on an iterative market Nash equilibrium model in which the companies can decide upon their offer strategies. An exponential smoothing of the bids submitted by the companies is applied to facilitate the convergence of the iterative procedure. We introduce the concept of meta-game equilibrium strategies to allow companies to have a range of offer strategies where several pure and mixed meta-game Nash equilibria are possible. The application of the proposed methodology is illustrated with a realistic case study to illustrate the effect on equilibria, prices and profits of different offer strategies and coalitions of generating companies. Pure and mixed Nash equilibria for short- and long-term periods are obtained and discussed.

Original languageEnglish
Title of host publication2009 IEEE Power and Energy Society General Meeting, PES '09
DOIs
Publication statusPublished - 2009
Externally publishedYes
Event2009 IEEE Power and Energy Society General Meeting, PES '09 - Calgary, AB, Canada
Duration: 26 Jul 200930 Jul 2009

Publication series

Name2009 IEEE Power and Energy Society General Meeting, PES '09

Conference

Conference2009 IEEE Power and Energy Society General Meeting, PES '09
Country/TerritoryCanada
CityCalgary, AB
Period26/07/0930/07/09

Keywords

  • Exponential smoothing
  • Market simulation
  • Meta-game
  • Mixed Nash equilibrium
  • Pure Nash equilibrium

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