Equilibrium of Interdependent Gas and Electricity Markets With Marginal Price Based Bilateral Energy Trading

The increasing interdependencies between natural gas systems and power systems create new business opportunities in coupled energy distribution markets. This paper studies the marginal price based bilateral energy trading on the equilibrium of coupled natural gas and electricity distribution markets. Convex relaxation is employed to solve a multiperiod optimal power flow problem, which is used to clear the electricity market. A successive second-order cone programming approach is utilized to solve a multiperiod optimal gas flow problem, which is used to clear the gas market. In addition, the line pack effect in the gas network is considered, which can offer storage capacity and provide extra operation flexibility for both networks. In both problems, locational marginal energy prices are recovered from the Lagrangian multipliers associated with nodal balancing equations. Furthermore, a best-response decomposition algorithm is developed to identify the equilibrium of the coupled energy markets with bilateral gas and electricity trading, which leverages the computational superiority of SOCPs. Cases studies on two test systems validate the proposed methodology.