EURO 2024 Copenhagen
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2429. The interactions between demand- and supply-side investment decisions in an oligopolistic electricity market.

Invited abstract in session TB-9: Game Theoretic Market Equilibrium Modelling, stream Energy Markets.

Tuesday, 10:30-12:00
Room: 10 (building: 116)

Authors (first author is the speaker)

1. Mel Devine
University College Dublin
2. Valentin Bertsch
Chair of Energy Systems & Energy Economics, Ruhr-Universität Bochum

Abstract

To meet carbon reduction targets, there will need to be investment in wind energy, solar PV, and battery storage in electricity markets across the world. In this work, we consider what the optimal investment mix for these technologies will be from the perspective of both generating firms and consumers. We present a stochastic Mixed Complementarity Problem where several generating firms maximise their profits while various consumer groups minimise their costs. All players modelled make hourly operational decisions in addition to long-term investment decisions. The generating firms may exert market power. The uncertainty of wind and solar PV are the sources of the model’s stochasticity. We apply the model to a case study of the Irish electricity system in 2030. We consider the optimal investment mix when market power is both present and absent from the market. We observe that the presence of market power increases electricity prices which leads to increased generating firms’ profits and consumer costs. It also leads to increased investment in renewable technologies and battery storage, which leads to reduced carbon emissions. Furthermore, we consider the effect a Feed-in-Premium (FiP) has on renewable investment and observe a counter-intuitive result whereby the absence of a FiP leads to less investment in renewables from generation companies but, consequently, increased investment in renewables from consumers.

Keywords

Status: accepted

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