Stochastic competitive analysis of hydropower and water supplies within an energy–water nexus

Energy and water are scarce resources and understanding the complicated energy–water nexus is an important issue for effective resource management. The purpose of this research was to analyze the competitive and cooperative relationships involving energy and water production and use. Specifically, tradeoff and integrated management of hydropower generation and water supplies are analyzed for energy–water systems. A Nash–Cournot model was established to analyze strategic behaviors among participants in energy–water systems. In the model, tradeoff analysis and integrated management of hydropower and water supplies were simulated for a reservoir system. In addition, hydropower and thermal power generation in competitive energy markets was examined. A case study of Dajia River reservoirs in the Tai-Chung and Chang-Hwa energy–water systems is presented. Dajia River is the second longest river in central Taiwan; the reservoirs system of Dajia River generates hydropower with installed capacity of 1150 MW. Strategic competitive and cooperative behaviors regarding energy–water linkage were quantified in the results. The results show that integrated management of hydropower and water supplies can increase renewable energy production, lower electricity equilibrium price, and decrease carbon dioxide emission.