# A Speculative Trading Model for the Electricity Market: Based on Japan Electric Power Exchange

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## Abstract

**:**

## 1. Introduction

## 2. Related Literature

## 3. Model Bases and Materials: Electricity Market Features

- Cost function follows the “merit order curve”.
- There are two types of suppliers: normal and renewable suppliers.
- There are two markets: forward market and spot market.
- Consumers’ demand curve is inelastic to the price.
- Only non-renewable suppliers have budgets for speculative trading.
- All suppliers and consumers are price-takers.

## 4. Theoretical Method

#### 4.1. Model Settings

#### 4.2. Model Equilibrium

**Assumption**

**1.**

## 5. Results and Discussion

#### 5.1. Price Relation

#### 5.2. Speculative Trading

**Lemma**

**1.**

**Proof.**

#### 5.3. Heterogeneous Belief

**Assumption**

**2.**

**Lemma**

**2.**

**Proof.**

**Lemma**

**3.**

## 6. Policy Implications and Conclusions

#### 6.1. Policy Implications

#### 6.2. Conclusions

## Author Contributions

## Funding

## Acknowledgments

## Conflicts of Interest

## Abbreviations

JEPX | Japan Electric Power Exchange |

${p}_{1}$ | date 1 price |

${p}_{2}$ | date 2 price |

X | maximum supply of normal suppliers |

${R}_{1}$ | minimum supply of renewable suppliers |

${R}_{2}$ | maximum supply of renewable suppliers |

${d}_{1}\left({p}_{1}\right)$ | consumers’ demand at date 1 |

${d}_{2}\left({p}_{2}\right)$ | consumers’ demand at date 2 |

a | marginal cost of normal suppliers |

${F}_{{p}_{1}}\left(p\right)$ | the population of suppliers who has beliefs ${E}_{i}\left[{p}_{2}\right]<p$ under ${p}_{1}$ |

${x}_{1}$ | suppliers’ selling volume at date 1 |

${x}_{2}$ | suppliers’ selling volume at date 1 |

${x}^{b}$ | suppliers’ purchase volume at date 1 |

${X}^{b}$ | total suppliers’ purchase volume at date 1 |

${S}_{1}\left({p}_{1}\right)$ | total supply volume at date 1 |

${S}_{2}\left({p}_{2}\right)$ | total supply volume at date 2 |

${D}_{1}\left({p}_{1}\right)$ | total demand volume at date 2 |

${D}_{2}\left({p}_{2}\right)$ | total demand volume at date 2 |

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**MDPI and ACS Style**

Maekawa, J.; Shimada, K. A Speculative Trading Model for the Electricity Market: Based on Japan Electric Power Exchange. *Energies* **2019**, *12*, 2946.
https://doi.org/10.3390/en12152946

**AMA Style**

Maekawa J, Shimada K. A Speculative Trading Model for the Electricity Market: Based on Japan Electric Power Exchange. *Energies*. 2019; 12(15):2946.
https://doi.org/10.3390/en12152946

**Chicago/Turabian Style**

Maekawa, Jun, and Koji Shimada. 2019. "A Speculative Trading Model for the Electricity Market: Based on Japan Electric Power Exchange" *Energies* 12, no. 15: 2946.
https://doi.org/10.3390/en12152946