Investments in generation capacities in an oligopolistic electricity ...

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Investments in generation capacities in an oligopolistic electricity ...

where the random variable β t over Ω is defined byβ 1 (ω) = 1 (5)β t−1β t (ω) =(ω)(1 + s t , for 2 ≤ t ≤ 5 (6)(ω))( ) t−5β5 (ω) 4β t (ω) = β 5 (ω), for t > 5 . (7)β 1In our interpretation of the open-loop equilibrium (see section 2.1), theprices obtained in future time steps are the one that players anticipate for the futureyears. Long-term demand is more price responsive and we therefore use long-termelasticity with value η = −0.9 as in Pineau and Murto (2003).After t = 1, the random evolution of the demand parameter g is assumedto be either stability (s = 0) or growth (s = 0.01). In the sustained growth scenarioω = (s, s, s, s), the slope of demand curves increases so that electricity consumptionwould need to increase by 1%/yr in order to keep prices constant at theirreference value. Figure 1 displays the total demand for each of the 16 scenarios,assuming that prices are kept constant to their reference values.Figure 1: Demand growth scenarios (with prices kept constant). MWh.All scenarios start from a unique point at 431 MWh. They have been shifted verticaly for clarity.TWh5805605405205004804604404202000 2005 2010 2015 2020 2025 2030Table 1 displays for each load period, j = 1, . . . , 5, the number of hours,the reference mean price (from the power exchange EEX data for 2005-2006) andthe slope of the inverse demand function.10

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