1236. Modelling demand- and supply-side investment decisions in an oligopolistic electricity market
Invited abstract in session TB-44: Equilibrium modelling in energy markets, stream Energy Economics & Management.
Tuesday, 10:30-12:00Room: Newlyn 1.01
Authors (first author is the speaker)
| 1. | Mel Devine
|
| University College Dublin | |
| 2. | Valentin Bertsch
|
| Chair of Energy Systems and Energy Economics, Ruhr-Universität Bochum |
Abstract
Meeting carbon reduction targets will require investment in various green technologies, including wind energy, solar PV, and battery storage. In this work, we examine the optimal investment mix for these technologies from the perspectives of both electricity-generating firms and consumers. We develop a game-theoretic optimisation model in which generating firms maximize their profits while consumer groups minimize the cost of meeting demand. All players make hourly operational decisions alongside long-term investment choices. Generating firms may exert market power by strategically adjusting their generation decisions to increase market prices and enhance profits. The model is formulated as a stochastic equilibrium problem, with wind and solar PV uncertainty the sources of stochasticity. We apply our model to a case study of the future Irish electricity system, which is expected to integrate a significant share of renewable energy. Our results show that market power raises electricity prices, increasing both generating firms’ profits and consumer costs. However, it also drives greater investment in renewable technologies and battery storage, ultimately reducing carbon emissions. Additionally, we explore how a rolling horizon approach can assess the impact of retail premia on renewable energy investment.
Keywords
- OR in Energy
- Electricity Markets
- Game Theory
Status: accepted
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