Strategic Behavior in Liberalized Electricity Sectors

The electricity infrastructure, like many other networked infrastructures, is an indispensable and integral part of developed economies. The economic growth, quality of life and general well-being of modern societies all depend on the smooth, reliable and efficient operation of electricity system. On the other hand, adverse strategic behavior by the newly emerged actors in liberalized electricity sectors poses a threat to seamless operation of electricity system. Analyzing strategic behavior is not a straightforward call, even with regard to the non-networked infrastructures. Adding network complexity and the peculiarities of electricity make it even more difficult to analyze strategic behavior. The analysis has to be done with tailored methods that take into account the peculiarities of the underlying system. This study proposes game theoretical formal modeling approach as a way to analyze strategic behavior in liberalized electricity sectors. Three cases that exemplify strategic behavior in liberalized electricity sectors are chosen to be analyzed. For each case, a context of the strategic problem is provided and a game theoretical formal model is created in order to quantitatively conceptualize and represent the strategic problem. The outcomes offer valuable insights into strategic behavior in liberalized electricity sectors and demonstrate the need for ongoing analysis in this domain. This dissertation is the result of Sertaç Oruç’s PhD research at the faculty of Technology, Policy and Management at Delft University of Technology in the Netherlands.