A comparative analysis of Cournot equilibrium and perfect competition models for electricity and hydrogen markets integration

Abstract

The relationship between hydrogen and electricity has gained attention due to their interconnected roles in the energy transition. Existing joint electricity and hydrogen market models often overlook the dependence between electricity and hydrogen prices, where electrolyzer production influences electricity prices. Conversely, the price of electricity significantly impacts the costs of hydrogen production. Considering this price-based interdependency, this study compares a Cournot equilibrium and a perfect competition market model. These models are transformed into a new quadratic optimization problem to facilitate resolution. The analysis highlights the potential of the Iberian region for hydrogen production. Moreover, it can be seen how renewable energy is prioritized for electricity production under perfect competition and the impact it has on the hydrogen market compared to the Cournot scenario.