Summary:
Hydrogen is becoming a key energy carrier in the transition toward decarbonization, as electrolysis creates strong interdependencies between electricity and hydrogen markets. Accurately representing strategic behaviour in these coupled markets is essential, yet current models fail to capture price-responsive bidding. To address this, a joint hybrid Cournot-Linear Supply Function Equilibria (CLSFE) model is developed and reformulated as an equivalent optimization problem, enabling tractable large-scale analysis. The model is applied to the Iberian system for 2030 and compared with perfect competition and Cournot benchmarks. Results show that hydrogen prices are lowest under CLSFE, with a reduction of about 44% relative to perfect competition and 10% to Cournot, while hydrogen demand increases by up to 58%. Electrolytic hydrogen production rises up to 92%, displacing grey hydrogen and reducing hydrogen-sector emissions. However, renewable self-curtailment reaches 82 TWh, indicating increased market power. These results highlight cross-sector trade-offs and support market design and policy analysis.
Spanish layman's summary:
El hidrógeno verde es clave para la descarbonización, y conecta los mercados de hidrógeno y electricidad. Este estudio utiliza un modelo de equilibrio en funciones de suministro para analizar estos mercados, aplicado al MIBEL, destacando el papel del hidrógeno en la descarbonización.
English layman's summary:
Green hydrogen is key to decarbonization, linking hydrogen and electricity markets. This study uses a new model to analyze market dynamics and strategic behavior, applied to the MIBEL. It offers insights for policy and market design, highlighting hydrogen's role in decarbonization.
Keywords: Electricity and hydrogen markets; Sector coupling; Supply functions; Nash equilibrium; Linear programming
JCR-JIF Impact Factor and WoS quartile: 9,200 - Q1 (2025)
DOI reference:
https://doi.org/10.1016/j.ijhydene.2026.155186
Published on paper: May 2026.
Published on-line: April 2026.
Citation:
F.A. Campos, G. Gavilanes Domínguez, L.A. Herrero, J. Villar, "A hybrid Cournot-linear supply function equilibria of coupled electricity and hydrogen markets: An equivalent optimization approach", International Journal of Hydrogen Energy, Vol. 236, pp. 155186, May 2026. [Online: April 2026] doi: 10.1016/j.ijhydene.2026.155186
