ORIGINAL PAPER Stochastic competitive analysis of hydropower and water supplies within an energy–water nexus Ming-Che Hu 1 • Tailin Huang 2 • Hwa-Lung Yu 1 • Ching-Pin Tung 1 Ó Springer-Verlag GmbH Germany, part of Springer Nature 2017 Abstract 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 gener- ation 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 manage- ment 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. Keywords Energy–water nexus  Hydropower  Nash–Cournot competition  Stochastic analysis List of symbols Indices f ; g Firm; f ; g ¼ 1; 2; ...; F h Generator; h ¼ 1; 2; ...; H i Node of transmission network; i ¼ 1; 2; ...; I s Stochastic scenarios; s ¼ 1; 2; ...; S t Time; t ¼ 1; 2; ...; T Coefficients B t Number of hours at time t (hr) CP f ;i;h Generation capacity of generator h for firm f in node i (MW) CT1 Hydropower generation cost (USD/MWh) CT3 f ;i;h Power generation cost of generator h for firm f in node i (USD/MWh) CT4 f ;i;h Water cost of generator h for firm f in node i (USD/m 3 ) DM1 t;s Water demand of the upstream dam of scenario s at t (m 3 /h) DM2 t;s Water demand of the downstream dam of scenario s at t (m 3 /h) HP Hydropower production rate (MWh/m 3 ) I1 t;s Water inflow of the upstream dam of scenario s at t (m 3 /h) I2 t;s Water inflow of the downstream dam of scenario s at t (m 3 /h) P s Probability of stochastic scenario s (dimensionless) PI i;t;s Price intercept of the linear power demand curve in i of s at t (USD/MWh) QI i;t;s Quantity intercept of the linear power demand curve in i of s at t (MW) ST1 Storage of the upstream dam (m 3 ) ST2 Storage of the downstream dam (m 3 ) WT f ;i;h Water demand of generator h for firm f in node i (m 3 /MWh) & Tailin Huang tailinhuang@mail.ncku.edu.tw 1 Department of Bioenvironmental Systems Engineering, National Taiwan University, No. 1, Sec. 4, Roosevelt Road, Taipei 10617, Taiwan 2 Department of Urban Planning, National Cheng Kung University, No. 1, University Road, Tainan 701, Taiwan 123 Stochastic Environmental Research and Risk Assessment https://doi.org/10.1007/s00477-017-1500-2