Strategic Investment in Power and Heat Markets: A Nash-Cournot Equilibrium Model

The current efforts to address the expansion planning of power and heat production facilities can lead to suboptimal results from a market perspective because these efforts often implicitly assume that power and heat systems are planned by a single entity. The present study addresses this issue by e...

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Bibliographic Details
Published in:IEEE transactions on industrial informatics 2022, Vol.18 (9), p.1-1
Main Authors: Chen, Sheng, Wei, Zhinong, Sun, Guoqiang, Yizhou, Zhou
Format: Article
Language:English
Subjects:
Cogeneration
Costs
Heat transfer
Investment
Investment strategy
Manganese
Resistance heating
Water heating
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Summary:The current efforts to address the expansion planning of power and heat production facilities can lead to suboptimal results from a market perspective because these efforts often implicitly assume that power and heat systems are planned by a single entity. The present study addresses this issue by establishing a Nash-Cournot equilibrium model, where the producers determine the quantity of power and heat that they produce independently and simultaneously, and thereby collectively affect the price. The model considers three types of producers, including power-only, combined power and heat, and heat-only producers, where each producer determines its own expansion investment strategies independently with the aim of maximizing its own profit. An investment equilibrium is obtained by reformulating the equilibrium model as a mixed complementarity problem. Numerical results carried out on two test systems illustrate the impact of transmission congestion and supply-side market power on the investment equilibria.
ISSN:1551-3203
1941-0050
DOI:10.1109/TII.2022.3142783