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A New Game Theoretical Approach for Modeling Export Energy Markets Equilibria

Ibrahim Abada and Andreas Ehrenmann

Year: 2018
Volume: Volume 39
Number: Number 5
DOI: 10.5547/01956574.39.5.iaba
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Abstract:
For resource-based economies, regulating exports is crucial. Nevertheless, we observe different countries deploying different export policies. We explain this difference via strategic interactions by giving two competing countries the possibility to design their export markets and select the level of competition they exert. In a first step, we test standard models and find that they fail to explain the multitude of observed behaviors: under the closed loop Nash equilibrium paradigm, the equilibrium is reached when countries completely open their export market. The Stackelberg game on the other hand concentrates the market in a plausible way but is not symmetric since it appoints a leader and follower. In a second step, we let countries choose between being strategic or passive in their interaction and demonstrate that the competitive outcome that we find in the closed loop Nash game rarely occurs. Only this last setup complies with the commonly observed situations.Keywords: Game theory, Cournot models, Open/closed loop models, Stackelberg models, Divisionalization



On the Viability of Energy Communities

Ibrahim Abada, Andreas Ehrenmann, and Xavier Lambin

Year: 2020
Volume: Volume 41
Number: Number 1
DOI: 10.5547/01956574.41.1.iaba
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Abstract:
Following the development of decentralized production technologies, energy communities have become a topic of increased interest. While the potential benefits have been described, we use the framework of cooperative game theory to test the ability of such communities to adequately share the gains. Indeed, despite the potential value created by such coalitions, there is no guarantee that they will be viable: a subset of participants may find it profitable to exit the community and create another one of their own. We take the case of a neighborhood, having access to a limited resource - e.g. a shared roof or piece of land - which they can exploit if they invest in some renewable production capacity. By joining the community, participants also enjoy aggregation gains in the form of reduced network fees. We find conditions depending on the structure of renewable installation costs, on the magnitude of the aggregation effect and coordination costs and, most importantly, on the chosen sharing rule, under which the whole energy community is stable. In particular, we show that standard sharing rules often fail to enable communities to form and we suggest the adoption of slightly more sophisticated rules. Efficiency could require the intervention of a local planner or a change in network tariff structures.





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