An iterative linear programming approach for modelling agent profit maximization in gas markets

Abstract

The application of the 3rd EU Gas directive has led to the development of trading hubs across Europe. In this situation, the aim of this work is to provide a tool for modelling the strategic behavior of the agents participating in these hubs to support both operation and regulatory decisions. Consequently, we are proposing a model aimed at modelling a hub combined with the operation of real-scale gas systems based on linear programming. To do so, the model proposed is based in an iterative algorithm that solves the individually each agent maximizing its profit. Furthermore, on top of this approach, a hub is modelled with an iterative search of the hub-clearing price that balances sales and purchases. Finally, the performance of this approach is demonstrated by means of a case of study that summarizes the configuration of the Iberian gas system.