Investigation of the impact of demand elasticity on electricity market using extended Cournot approach

•We developed an extended Cournot model and applied it to the electricity market.•The extended Cournot model considers the demand elasticity.•Demand elasticity has proved to influence the market outcome in an effective way.•Results from the extended Cournot model and Plexos show a good agreement.

The impact of demand elasticity on electricity market is investigated in this paper. An extended Cournot model is derived from the classical Cournot model by including the consideration of demand elasticity. Simulation results show that, the demand elasticity can effectively influence the market outcomes, i.e. market clearing price, load payment, generation companies’ (GENCOs) individual output and profit. Furthermore, comparison of results using the extended Cournot model with those obtained using an industrial-grade software package (Plexos) shows a good agreement.