Natural dynamic equilibrium and multiple equilibria of competitive power markets

Abstract

This paper presents a new solution method for the Cournot game equilibrium analysis. The new method allows arbitrary differentiable cost and demand characteristics to be implemented. The solution does not rely on conjectures about market participants' behaviour. The approach taken transforms the search for the Cournot game equilibrium to a problem of under-constrained, multivariate non-linear optimisation. Genetic algorithm techniques were adapted to numerically solve the optimisation for various power markets. Single-consumer power markets are examined and discussed. A new exponential-integral demand function capable of realistically modelling volume-specific inelastic demand is presented. Methods of applying the new approach to assess current market operations and future restructuring options are presented.