Electricity market game

The regional oligopolistic model of the electricity market in the Czech Republic and its neighbor states is developed. Electricity producers are the players in this non-cooperative dynamic game. Their strategies are their productions, sales, bids on the cross-border auctions and corresponding cross-border flows of electricity and their investments into building new power plants in discrete time intervals. Each producer is maximizing its discounted profit, the excess between incomes from electricity sales and costs, where costs include electricity generation costs, bids on the cross-border auctions and investments costs, in each time interval. The main aim of the model is to describe and solve the competition in the cross-border auctions together with the classic oligopoly game of the electricity producers in each time interval and to show the time development on the supply side. The equilibrium solution is supposed to reach in every time interval and so in general too. For finding solution it is designed the iterative method according to the fictive game principle. This problem should have result in the unique pure Nash equilibrium. The demand of electricity is supposed to rise in all time intervals. For the model calibration there were used real numbers but also many approximations, that were determined with respect to obtained model solutions. The number of iteration depends on the initial values of all variables and so finding good initial values is one of the problems to be solved.