Modelling the Emergence of Functioning Natural Gas Wholesale Markets

The European Commission considers liberalized and liquid natural gas wholesale markets as a priority. Agent-based models are considered suited to provide insight in what market conditions contribute to the emergence of functioning natural gas wholesale markets. We present an abstraction of the natural gas market to explore the emergence of functioning wholesale markets. For this abstraction, we apply graph theory, supplier selection theory, auction theory, and insights from finance to the natural gas market. The abstraction is developed into a simulation model, of which different aspects have been validated with economic logic. In this research we demonstrate that the applied theories and methods can form a feedback loop that allows us to explore the evolution of marketplaces; and that the abstraction is valid in the context of natural gas markets. Minor adjustments to the abstraction allow it to be used to explore other markets (e.g. biogas). The abstraction can be extended by considering more than 1 wholesale market, including more aspects of the physical infrastructure, and extend the behaviour of market participants by considering strategic behaviour.

Subject

agent-based modelling
bilateral negotiation
contract selection
natural gas
socio-technical system
wholesale market

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master thesis

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