A game-theoretic model for generation capacity adequacy

A comparison between different investment incentive mechanisms

19th december 2007, from 2 pm to 4 pm

GIS LARSEN, campus of Fontenay aux Roses

Speaker : Haikel Khalfallah (GATE)


Abstract : This paper presents an application of non-cooperative game theory to generation expansion planning in a competitive electricity industry. We apply the Cournot model of oligopoly behavior to formulate a dynamic model that may characterize expansion planning in a competitive regime. We focus our work on studying the effect of different investment incentive mechanisms (reliability options, long term capacity markets and capacity payments) on the long term capacity adequacy of the system. Different market structures are also compared such as monopoly and oligopoly situations and the presence or not of asymmetric information. Stochastic dynamic programming method is used to deal with the stochastic environment of the market (future demand) and the variational inequality method is employed to find Nash equilibriums at each stage of the game. A simple example is presented to illustrate how the optimal competitor’s strategies could change according to the chosen investment incentive mechanism and the market structure.

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