Strategic Offering and Equilibrium in Coupled Gas and Electricity Markets

The wide integration of gas-fired units and implementation of power-to-gas technologies bring increasing interdependence among the natural gas and electricity infrastructures. This paper studies the equilibrium of the coupled gas and electricity markets, which is driven by the strategic offering behaviors: each producer endeavours to maximize its own profit by taking the market clearing process into consideration. The market equilibrium can be obtained from an equilibrium problem with equilibrium constraints. A special diagonalization algorithm is devised, in which the unilateral equilibrium of the gas or electricity market is found in the inner loop given the rivals’ strategies; the interactions of the two markets are tackled in the outer loop. Case studies on two test systems validate the proposed methodology.