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Generation side strategy and user side cost based on equilibrium analysis of the power market under the reliability option.
- Source :
-
Energy . Jan2024, Vol. 287, pN.PAG-N.PAG. 1p. - Publication Year :
- 2024
-
Abstract
- The reliability option (RO) ensures generation capacity adequacy, drawing inspiration from financial product options. However, most recent RO studies overlook the gaming strategies employed by power producers. This paper proposes a bi-level model based on an equilibrium analysis of the power market under RO. The upper-level model aims to maximize the power producers' profit, whereas the lower-level model focuses on market clearing. Profit calculation considers factors like electricity sales income, option fees income, fuel cost, expansion investment cost, refund cost, and penalties. The bi-level model is reformulated into a mathematical problem with equilibrium constraints (MPEC) for each producer using Karush–Kuhn–Tucker conditions of the lower-level model. We then apply a series of linearization methods. The market equilibrium is obtained through the dynamic game framework for all MPECs. We also provide a comprehensive purchase cost calculation and demonstrate its equivalence to user side surplus. We examine cases from various spot market construction maturities in a provincial area of China. Our results indicate that implementing the RO mechanism and aligning parameters with the proposed optimal RO parameter curve, one can reduce the comprehensive purchase cost. • Various strategies of all power producers are considered. • The MPEC under RO mechanism is precisely linearized to MILP. • Dynamic game framework is used to solve market equilibrium to be more practical. • RO mechanism can increase the user side surplus according to the equilibrium. • The optimal RO parameter curve is obtained as the parameter setting suggestion. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 03605442
- Volume :
- 287
- Database :
- Academic Search Index
- Journal :
- Energy
- Publication Type :
- Academic Journal
- Accession number :
- 173966588
- Full Text :
- https://doi.org/10.1016/j.energy.2023.129721