Game-theoretic Analysis of the Ukraine Day-ahead Electricity Market

Abstract

Market power in concentrated wholesale markets like Ukraine can lead to inefficient price and dispatch outcomes. This paper presents an intertemporal Cournot-Nash game-theoretic equilibrium model to investigate pricing and dispatch outcomes in the Ukraine day-ahead electricity market. The gaming model in conjunction with a market-clearing model is used to first calibrate the model against the observed dispatch/prices. It is then deployed to analyze alternative market power mitigation scenarios that are compared and contrasted against a perfectly competitive benchmark. The numerical results of the analysis indicate a significant scale of the market power exercised by the strategic players in Ukraine and hence a significant departure from an efficient benchmark. There are however measures such as divesture of the dominant player and/or vesting contract that may mitigate market power.