Multicommodity spatial Cournot model for generator bidding analysis

Conventional behavioral models such as Cournot to analyze generator behavior do not reflect many of the complexities of advanced electricity markets. Dispatch and pricing in a number of advanced pool-based electricity markets worldwide explicitly recognize the co-optimization of ancillary services as well as transmission constraints. This paper discusses the development of, and experiments with, a multimarket Cournot model that deals with co-optimization of multiple commodities namely, energy and various classes of ancillary services and deals with transmission constraints that separate these commodity markets spatially. We also discuss the multimarket extension of the Cournot model to deal with bilateral contracts (for energy). A nonlinear programming formulation of the proposed model and the analysis of nodal prices are presented followed by a detailed set of experiments using a simple three-node system. The model is expected to add to understanding of complex interactions between energy and ancillary services markets, and further the impact transmission capacity limits may have on exercise of market power of each of these markets.