Equilibria in Interdependent Natural-gas and Electric Power Markets: an Analytical Approach

Natural-gas and electric power systems their corresponding markets have evolved over time independently. However, both are increasingly interdependent since combined cycle gas turbines that use natural to produce electricity couple them together. Therefore, suitable analysis techniques most needed comprehend the consequences on market outcomes of an increasing level integration systems. There is a vast literature integrated natural-gas assuming two operated centrally by single operator. This assumption often untrue in real world, which necessitates developing models for these yet independent markets. In this vein, paper addresses gap provides analytical Nash-Cournot equilibrium represent joint operation with participants each make own decisions independently seeking maximum profits, as case world. We develop model apply Karush-Kuhn-Tucker (KKT) approach obtain equilibria double-duopoly study interaction derive insightful results. Moreover, we closed-form expressions spot-market markets, relevant practical significance decision makers. complement detailed sensitivity analysis.