Beyond the Use of Linear Approximations for Modelling Nash-Cournot Equilibria

A comparison of Nash-Cournot equilibria using DC and AC approximations of the transmission system is presented in this paper. The goal of doing this comparison is to identify the impact of reactive power and voltage-related issues on Nash equilibria. Following the same rationality of competition and the same solution scheme, a considerable mismatch in outcomes is found. This shows that the use of common linear approximations of the transmission system to model strategic behaviour in electricity markets may produce outcomes that are unlikely to be observed in real markets. Three- and 14-node systems are used to analyze different study cases.