Investments in a combined energy network model: substitution between natural gas and electricity?

Jan Abrell and Hannes Weigt

Working papers from Faculty of Business and Economics - University of Basel

Abstract: Natural gas plays an important role in the future development of electricity markets as it is the least emission intensive fossil generation option while additionally providing the needed flexibility in plant operation to deal with intermittent renewable generation. As both the electricity and the natural gas market rely on networks, congestion on one market may lead to changes on another. In addition, investments in one market have an impact in the other and may even become substitutes for one another. The objective of this paper is to develop a dynamic model representation of coupled natural gas and electricity network markets to test the potential interaction with respect to investments. The model is tested under simplified conditions as well as for a stylized European network setting. The results indicate that there is a potential for investment-substitution and significant market interactions that warrants the application of coupled models especially with regard to simulations of long term system developments.

Keywords: electricity network; natural gas network; Europe; MCP (search for similar items in EconPapers)
JEL-codes: L94 L95 Q4 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-ene and nep-reg
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https://edoc.unibas.ch/34943/1/Combined_dynamic_Abrell_Weigt_2014.05.pdf (application/pdf)

Related works:
Journal Article: Investments in a Combined Energy Network Model: Substitution between Natural Gas and Electricity? (2016)
Journal Article: Investments in a Combined Energy Network Model: Substitution between Natural Gas and Electricity? (2016)
Working Paper: Investments in a Combined Energy Network Model: Substitution between Natural Gas and Electricity? (2016)
Working Paper: Investments in a Combined Energy Network Model: Substitution between Natural Gas And Electricity? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:bsl:wpaper:2014/05

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