Controllable vs. random: renewable generation competition in a local energy market

Dongwei Zhao, Hao Wang, Jianwei Huang, Xiaojun Lin

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Renewable energy resources are playing an increasingly important role in serving consumers at the distribution level of power systems. This paper studies a duopoly two-settlement local renewable energy market, in which one energy supplier has controllable generations (with the help of energy storage) while the other supplier has random generations. In the day-ahead energy market, suppliers determine the bidding prices and quantities, and then consumers decide the energy quantity to purchase from each supplier. In the real-time energy market, a supplier gets penalized if he cannot deliver the amount of energy as committed in the day-ahead market. We formulate the interactions between suppliers and consumers in the day-ahead market as a two-stage problem. The two-dimensional bidding strategies (price and quantity) in the day-ahead market together with the penalty in the real-time market increase the complexity of the equilibrium analysis. To address such a challenge, we first derive weakly dominant bidding quantity strategies for both suppliers, and then characterize the corresponding pure and mixed price equilibrium. We demonstrate that the supplier with controllable generations can earn a much higher payoff than the supplier with random generations. In some cases, however, we show the perhaps counterintuitive result that a higher penalty or a higher variance of random generations may increase both suppliers' payoffs.

Original languageEnglish
Title of host publication2019 IEEE International Conference on Communications (ICC) - Proceedings
EditorsJiangzhou Wang
Place of PublicationPiscataway NJ USA
PublisherIEEE, Institute of Electrical and Electronics Engineers
Number of pages6
ISBN (Electronic)9781538680889
ISBN (Print)9781538680896
Publication statusPublished - 2019
Externally publishedYes
EventIEEE International Conference on Communications 2019: Empowering Intelligent Communications - Shanghai, China
Duration: 20 May 201924 May 2019 (Proceedings)


ConferenceIEEE International Conference on Communications 2019
Abbreviated titleICC 2019
Internet address

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