The Interdependency of electricity and natural gas markets: coupling of models

Abstract

The growth of power generation based on natural gas fired power plants (NGFPPs) in the recent years has lead to increasing interactions between electricity and natural gas systems, which can be used as a competitive advantage for an agent operating in both markets. Therefore, the larger is NGFPPs consumption the larger is the interdependence between electricity and natural gas systems, and the analysis of the integration of both systems becomes more necessary. The objective of this paper is to analyze economic interactions that can arise in the medium term when a company operates in both systems. Each system (electricity and natural gas) will be represented by an optimization model under perfect competition behavior. A method to couple both independent optimization models will be discussed.