A TWO-STAGE LINEAR SUPPLY FUNCTION EQUILIBRIUM MODEL FOR ELECTRICITY MARKETS WITH FORWARD CONTRACTS

This paper investigates generators' strategic behaviors in contract signing in the forward market and power dispatching in the pool electricity market. A two-stage stochastic equilibrium model is proposed to characterize the interaction of generators' competition in both markets, where a linear supply function equilibrium model is investigated for analyzing generators' bidding strategies in the day-ahead market for the real power transaction in the pool market. The main results of the paper concern the structure of the two-stage equilibrium model in the forward-spot market: first we develop a result on the unique equilibrium in the day-ahead market for every demand scenario. Moreover, we also establish some sufficient conditions for the uniqueness and existence of stochastic Nash equilibrium in the forward-spot market. In the numerical test, we present some stability analysis on the market clearing price and strike price.