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An Oligopolistic Electricity Market Model with Interdependent Segments

Pierre-Olivier Pineau and Georges Zaccour

Year: 2007
Volume: Volume 28
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No3-9
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Abstract:
In this paper,we model a two-period electricity market with interdependent demand, where oligopolistic generators make investments in peak-and base-load capacities. Different prices are obtained in the two periods, and residential consumers can react to prices across demand periods. We characterize the Cournot equilibrium obtained as a function of price and cross-price effects and present a numerical illustration based on the Ontario (Canada) electricity market.



A Dynamic Oligopolistic Electricity Market with Interdependent Market Segments

Pierre-Olivier Pineau, Hasina Rasata, and Georges Zaccour

Year: 2011
Volume: Volume 32
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol32-No4-9
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Abstract:
We propose a deterministic, discrete-time, finite-horizon oligopoly model to investigate investment and production equilibrium strategies, in a setting where demand evolves over time and the two market-segment loads (peak-and base-load) are interdependent. The players (generators) compete a` la Cournot, open-loop Nash equilibria are computed and numerical results are discussed. The model is calibrated with data from Ontario, Canada. We assess the impact on equilibrium strategies of a generation sector with more market power than what is actually the case. We also find a slight difference in the investment sequence when interdependent demand segments are considered. Finally, we analyze the impact of increasing demand elasticities over time, and varying the financial values of the production capacities that remain at the end of the planning horizon. We believe that such a tool is valuable for professionals and scholars interested in the dynamics of production capacity mix (portfolio of technologies) in the electricity sector. It is also of paramount importance for public decision makers who have to simultaneously deal with environmental issues and with price control, both of which are politically sensitive.



Degrees of Coordination in Market Coupling and Counter-Trading

Giorgia Oggioni and Yves Smeers

Year: 2012
Volume: Volume 33
Number: Number 3
DOI: 10.5547/01956574.33.3.3
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Abstract:
Cross-border trade remains a contentious issue in the restructuring of the European electricity market. This paper analyzes the cross-border trade problem through a set of models that represent different degrees of coordination both between the energy and the transmission markets and among national Transmission System Operators (TSOs). We first present a nodal price-like organization of the system, where Power Exchanges (PXs) and Transmission System Operators are integrated to operate the energy and transmission markets. This system is not implemented in Europe but its success elsewhere makes it the natural reference for the study. We then move to a more realistic representation of the European electricity market based on the so-called market coupling design where energy and transmission are operated separately by PXs and TSOs. We consider different degrees of coordination of the national TSOs' activities to assess the range of inefficiencies that the lack of integration can lead to. The paper supposes price taking agents and hence leaves aside the incentive to game the system induced by zonal systems. Keywords: Market Coupling, Counter-Trading, Coordination, Generalized Nash Equilibrium, European Electricity Market



Another Step Towards Equilibrium Offers in Unit Commitment Auctions with Nonconvex Costs: Multi-Firm Oligopolies

Joseph E. Duggan, Jr. and Ramteen Sioshansi

Year: 2019
Volume: Volume 40
Number: Number 6
DOI: 10.5547/01956574.40.6.jdug
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Abstract:
There are two uniform-price-auction formats - centrally and self-committed - that are used commonly in wholesale electricity markets. Both formats are operated by an independent third-party market operator, which solicits supply offers from generators and determines how much energy they produce to serve customer demand. In centrally committed markets, generators submit complex offers that convey all of their non-convex operating costs and constraints. Conversely, generators submit simple offers in self-committed markets that specify only the price at which they are willing to supply energy. Thus, generators must internalize their non-convex costs and other operating constraints in submitting offers in a self-committed market. Centrally committed markets include also a provision that each generator is made whole on the basis of its submitted offers. No such guarantees exist in self-committed markets. This paper builds on the work of Sioshansi and Nicholson (2011) and studies the energy-cost ranking and incentive properties of the two market designs in a multi-firm oligopoly setting. We derive Nash equilibria under both market designs. We find that equilibrium offer behavior across the two market designs is qualitatively similar to the duopoly model when demand is high. However, when demand is low, cost equivalence between the two market designs breaks down. This is because inframarginal generators are able to earn positive profits in certain states of low demand in self-committed markets, whereas all generators are constrained to earn zero profits in low-demand states in the centrally-committed market design.





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