Abstract
This paper presents a Nash equilibrium approach to model a non-cooperative game that takes place among Brazilian hydro-generating companies in the annual process called “seasonalization”. We have “remade” the seasonalizations that occurred in the period of 2013–2020 by using our model and comparing the financial outcomes with the current ones that resulted from the seasonalizations the generators made each year, with financial improvements in almost every year. By using the Nash equilibrium approach, it is possible to achieve optimal decisions concerning the seasonalization process that were not evident by using traditional methods. This approach is useful for companies willing to enhance their income and to improve their risk management by making better choices in seasonalization.
Highlights
The reform of the electricity markets around the world in the 1990s and the introduction of competition in the energy transactions provided new subjects for the application of game theory
The objective of this paper was to analyze the behavior of market agents and compare it with a strategy calculated by a simulation model with a game equilibrium (Nash equilibrium) approach
Notice that this table shows the standard deviation of the total financial result achieved at the equilibrium
Summary
The reform of the electricity markets around the world in the 1990s and the introduction of competition in the energy transactions provided new subjects for the application of game theory. [2] implemented four numerical methods and tested them in four experiments of non-cooperative games, including an electricity market game. Another field of application towards the Nash equilibrium approach is regarding the market pricing and bid definition considering the physical system and the interaction among the participant agents. A Nash equilibrium approach was proposed in [4] to help with the interaction between the ISO and generators agents in the generation maintenance schedule problem. Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations
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