Investment Equilibria Involving Gas-Fired Power Units in Electricity and Gas Markets

We study investment equilibria in electricity and gas markets wherein electricity producers and natural gas suppliers behave strategically. We consider also hybrid producers that own both generating units and gas sources. Each strategic producer determines its investment decisions in gas-fired units, and its offering and bidding strategies to maximize its own profit, anticipating electricity and gas market-clearing outcomes. Producers owning gas-fired units submit bids to the gas market to procure fuel and offers to the electricity market to sell electricity. The resulting model is recast as an equilibrium problem with equilibrium constraints that we solve using a direct approach. Numerical results from two test systems illustrate the proposed methodology.