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An equilibrium market power model for power markets and tradable green certificates, including Kirchhoff's Laws and Nash-Cournot competition

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  • Helgesen, Per Ivar
  • Tomasgard, Asgeir

Abstract

We investigate the economic impacts of introducing tradable green certificates to promote electricity produced from renewable energy sources. We formulate a mixed complementarity, multi-region, partial equilibrium model, clearing both the electricity and green certificate markets under the assumption of Nash-Cournot market competition. We introduce a mixed complementarity formulation of the tradable green certificate policy scheme. The main contribution of this paper is to combine a public support scheme for electricity production with a power market model in which strategic generators compete and exercise market power in a capacitated transmission network with spatial energy exchange.

Suggested Citation

  • Helgesen, Per Ivar & Tomasgard, Asgeir, 2018. "An equilibrium market power model for power markets and tradable green certificates, including Kirchhoff's Laws and Nash-Cournot competition," Energy Economics, Elsevier, vol. 70(C), pages 270-288.
    • Handle: RePEc:eee:eneeco:v:70:y:2018:i:c:p:270-288
    DOI: 10.1016/j.eneco.2018.01.013
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    More about this item

    Keywords

    Tradable green certificates; Equilibrium modeling; Market power; Energy policy; Electric power; Electric transmission;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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