2023/05/21 by Dongwei Zhao, Audun Botterud, Zhao, Dongwei +3 · 1 citation
Energy · Engineering · #Computer Science and Game Theory (cs.GT) #Electric Power System Optimization #Energy Efficiency and Management #FOS: Computer and information sciences #FOS: Economics and business #FOS: Electrical engineering #Smart Grid Energy Management #Systems and Control (eess.SY) #Theoretical Economics (econ.TH) #electronic engineering #information engineering
paper · pdf · doi:10.48550/arxiv.2305.12309
openalex publication_date 2023/05/21 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
This paper evaluates market equilibrium under different pricing mechanisms in a two-settlement 100%-renewables electricity market. Given general probability distributions of renewable energy, we establish game-theoretical models to analyze equilibrium bidding strategies, market prices, and profits under uniform pricing (UP) and pay-as-bid pricing (PAB). We prove that UP can incentivize suppliers to withhold bidding quantities and lead to price spikes. PAB can reduce the market price, but it may lead to a mixed-strategy price equilibrium. Then, we present a regulated uniform pricing scheme (RUP) based on suppliers' marginal costs that include penalty costs for real-time deviations. We show that RUP can achieve lower yet positive prices and profits compared with PAB in a duopoly market, which approximates the least-cost system outcome. Simulations with synthetic and real data find that under PAB and RUP, higher uncertainty of renewables and real-time shortage penalty prices can increase the market price by encouraging lower bidding quantities, thereby increasing suppliers' profits.