Market equilibrium with strategic pricing and strategic constraints in renewable energy: the role of private energy storage
With the increasing prevalence of renewable energy (RE) companies equipped with private energy storage (ES) systems, a dual capability emerges to offer strategic pricing and strategic constraints in market competition. Specifically, these RE companies can strategically leverage their own private ESs...
| Main Authors: | , , , , , |
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| Format: | Article |
| Language: | English |
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Frontiers Media S.A.
2024-03-01
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| Series: | Frontiers in Energy Research |
| Subjects: | |
| Online Access: | https://www.frontiersin.org/articles/10.3389/fenrg.2024.1346528/full |
| _version_ | 1797253956793008128 |
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| author | Jucheng Xiao Yan Meng Li Li Shuai Fan Guangyu He Zuyi Li |
| author_facet | Jucheng Xiao Yan Meng Li Li Shuai Fan Guangyu He Zuyi Li |
| author_sort | Jucheng Xiao |
| collection | DOAJ |
| description | With the increasing prevalence of renewable energy (RE) companies equipped with private energy storage (ES) systems, a dual capability emerges to offer strategic pricing and strategic constraints in market competition. Specifically, these RE companies can strategically leverage their own private ESs to modulate the variability of RE output limits and introduce modified constraints within the market. To examine these new strategic behaviors and the resulting market equilibria, we introduce an innovative bilevel strategic behavior model. The upper level of the model delineates the strategy for RE profit maximization through the imposition of strategic constraints and pricing schemes, while the lower level calculates the revenue outcomes for all entities in the day-ahead energy market clearing. The integration of the bilevel models from all strategic entities leads to the formulation of a new equilibrium problem with equilibrium constraints (EPEC), the solution of which indicates a novel market equilibrium. The impacts of these market equilibria on critical system operation metrics are then evaluated across two representative market mechanisms. Our numerical experiments reveal that RE exhibits low sensitivity to the private ES’s cost, suggesting that the behavior of imposing strategic constraints may be widespread among RE companies owning private ESs. Furthermore, the introduction of strategic constraints enhances the competitiveness of RE, significantly affecting social welfare, energy pricing, and RE integration rate. The study concludes with insights that could inform practical market transactions and system operations. |
| first_indexed | 2024-04-24T21:42:18Z |
| format | Article |
| id | doaj.art-1de4dcb7305d48368f7023db31ff68f2 |
| institution | Directory Open Access Journal |
| issn | 2296-598X |
| language | English |
| last_indexed | 2024-04-24T21:42:18Z |
| publishDate | 2024-03-01 |
| publisher | Frontiers Media S.A. |
| record_format | Article |
| series | Frontiers in Energy Research |
| spelling | doaj.art-1de4dcb7305d48368f7023db31ff68f22024-03-21T05:13:29ZengFrontiers Media S.A.Frontiers in Energy Research2296-598X2024-03-011210.3389/fenrg.2024.13465281346528Market equilibrium with strategic pricing and strategic constraints in renewable energy: the role of private energy storageJucheng Xiao0Yan Meng1Li Li2Shuai Fan3Guangyu He4Zuyi Li5Key Laboratory of Control of Power Transmission and Conversion, Ministry of Education, Shanghai Jiaotong University, Shanghai, ChinaKey Laboratory of Control of Power Transmission and Conversion, Ministry of Education, Shanghai Jiaotong University, Shanghai, ChinaKey Laboratory of Control of Power Transmission and Conversion, Ministry of Education, Shanghai Jiaotong University, Shanghai, ChinaKey Laboratory of Control of Power Transmission and Conversion, Ministry of Education, Shanghai Jiaotong University, Shanghai, ChinaKey Laboratory of Control of Power Transmission and Conversion, Ministry of Education, Shanghai Jiaotong University, Shanghai, ChinaCollege of Electrical Engineering, Zhejiang University, Hangzhou, ChinaWith the increasing prevalence of renewable energy (RE) companies equipped with private energy storage (ES) systems, a dual capability emerges to offer strategic pricing and strategic constraints in market competition. Specifically, these RE companies can strategically leverage their own private ESs to modulate the variability of RE output limits and introduce modified constraints within the market. To examine these new strategic behaviors and the resulting market equilibria, we introduce an innovative bilevel strategic behavior model. The upper level of the model delineates the strategy for RE profit maximization through the imposition of strategic constraints and pricing schemes, while the lower level calculates the revenue outcomes for all entities in the day-ahead energy market clearing. The integration of the bilevel models from all strategic entities leads to the formulation of a new equilibrium problem with equilibrium constraints (EPEC), the solution of which indicates a novel market equilibrium. The impacts of these market equilibria on critical system operation metrics are then evaluated across two representative market mechanisms. Our numerical experiments reveal that RE exhibits low sensitivity to the private ES’s cost, suggesting that the behavior of imposing strategic constraints may be widespread among RE companies owning private ESs. Furthermore, the introduction of strategic constraints enhances the competitiveness of RE, significantly affecting social welfare, energy pricing, and RE integration rate. The study concludes with insights that could inform practical market transactions and system operations.https://www.frontiersin.org/articles/10.3389/fenrg.2024.1346528/fullelectricity marketstrategic behaviorrenewable energyprivate energy storageequilibrium problem with equilibrium constraints (EPEC) |
| spellingShingle | Jucheng Xiao Yan Meng Li Li Shuai Fan Guangyu He Zuyi Li Market equilibrium with strategic pricing and strategic constraints in renewable energy: the role of private energy storage Frontiers in Energy Research electricity market strategic behavior renewable energy private energy storage equilibrium problem with equilibrium constraints (EPEC) |
| title | Market equilibrium with strategic pricing and strategic constraints in renewable energy: the role of private energy storage |
| title_full | Market equilibrium with strategic pricing and strategic constraints in renewable energy: the role of private energy storage |
| title_fullStr | Market equilibrium with strategic pricing and strategic constraints in renewable energy: the role of private energy storage |
| title_full_unstemmed | Market equilibrium with strategic pricing and strategic constraints in renewable energy: the role of private energy storage |
| title_short | Market equilibrium with strategic pricing and strategic constraints in renewable energy: the role of private energy storage |
| title_sort | market equilibrium with strategic pricing and strategic constraints in renewable energy the role of private energy storage |
| topic | electricity market strategic behavior renewable energy private energy storage equilibrium problem with equilibrium constraints (EPEC) |
| url | https://www.frontiersin.org/articles/10.3389/fenrg.2024.1346528/full |
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