Nash Equilibrium of a Retail Electricity Market With a High Penetration of Small Renewable Suppliers Available to Purchase

Increasing the level of the competition, a worldwide trend in the evolution of electricity markets, has made game theory a notably popular approach to find the market equilibrium. This paper models a retail electricity market with a high penetration of renewable resources. Using game theory, the clearing electricity prices, as well as the optimum behavior of market participants are obtained. In this model, which is inspired by the “Energy Internet” concept, consumers play an active role in managing their load demands. This highly dynamic model allows us to analyze consumers’ reaction to price fluctuations. Spot pricing, which is employed here to model the electricity market, can make consumers react to the high electricity prices. This is particularly important in the demand side management, where consumers should modify their demand through financial incentives. Two types of active players are considered in this electricity market, small electricity suppliers and consumers. Electricity grid, while present in the market, only takes the responsibility to compensate for the deficiency of power from small and mid-size suppliers. The problem is formulated mathematically, subject to a number of local and global constraints to find the Nash equilibrium.