A stochastic generalized Nash-Cournot model for the northwestern European natural gas markets with a fuel substitution demand function: The S-GaMMES model

Ibrahim Abada

Working Papers from Chaire Economie du climat

Abstract: This article presents a stochastic dynamic Generalized Nash-Cournot model to describe the evolution of the natural gas markets. The major gas chain players are depicted including: producers, consumers, storage, and pipeline operators, as well as intermediate local traders. Our economic structure description takes into account market power and the demand representation tries to capture the possible fuel substitution that can be made between the consumption of oil, coal, and natural gas in the overall fossil energy consumption. The demand is made random because of the oil price fluctuations. We take into account the long-term aspects inherent to some markets, in an endogenous way. This particularity of our description makes the model a Generalized Nash Equilibrium problem that needs to be solved using specialized mathematical techniques. The model has been applied to represent the European natural gas market and to forecast, until 2035, after a calibration process, consumption, prices, production, and long-term contract prices and volumes. Finally, we defined and calculated the value of stochastic solution adapted to our model.

Keywords: Energy markets modeling; Game theory; Generalized Nash-Cournot equilibria; Quasi-Variational Inequality; Equilibrium problems; Stochastic programing. (search for similar items in EconPapers)
Pages: 46 pages
Date: 2012-01
New Economics Papers: this item is included in nep-ene
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Citations: View citations in EconPapers (12)

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