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Fast energy transition as a best strategy for all? The nash equilibrium of long-term energy planning strategies in coupled power markets

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  • Pfeifer, Antun
  • Feijoo, Felipe
  • Duić, Neven

Abstract

The research links energy system development planning to day-ahead energy markets, market coupling, and renewable energy integration, with a novel approach based on game theory. A two-level method is suggested for long-term energy strategy decisions. In the first stage, four hypothetical zones are simulated using an energy system's operation optimization model, emphasizing electricity flows. Game theory is employed in the second stage to select the best market-coupled zone strategy. A game reflecting transition dynamic, renewables integration, and demand response is formulated in the second step of the approach, where each of the four zones have two possible strategies (fast or slow transition), resulting in 16 sets of strategies (scenarios). Results demonstrate the feasibility of determining a Nash equilibrium, enhancing decision-making compared to prior methods. For the observed hypothetical case, a pure Nash equilibrium is found, where all zones opt for a rapid energy transition.

Suggested Citation

  • Pfeifer, Antun & Feijoo, Felipe & Duić, Neven, 2023. "Fast energy transition as a best strategy for all? The nash equilibrium of long-term energy planning strategies in coupled power markets," Energy, Elsevier, vol. 284(C).
    • Handle: RePEc:eee:energy:v:284:y:2023:i:c:s0360544223025033
    DOI: 10.1016/j.energy.2023.129109
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