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Game theory-based electricity pricing decisions incorporating prosumer energy preferences and renewable portfolio standard

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  • Tsao, Yu-Chung
  • Ai, Ho Thi Thu
  • Lu, Jye-Chyi
  • Wang, Chao

Abstract

The implementation of renewable energy-based power generation substantially enhances the greenness of the energy market. Concerns about pricing policies and widespread renewable energy (RE) industries have resulted in ongoing economic conflicts among stakeholders, including power companies (PCs) and different prosumer groups. This study proposes a game theory framework embedded in a pricing model to examine the influences of three-part tariff (3 PT) and renewable portfolio standard (RPS) on electricity pricing. Employing a Stackelberg game, the objective is to maximize stakeholders' profits through a sequential decision-making relationship between PCs (as the leader), and residential and industrial prosumers (as the followers). The findings reveal that the PC can maximize profit by coordinating the 3 PT and RPS, regardless of environmental awareness. Furthermore, given the prosumers’ preference for peer-to-peer (P2P) energy trading, the PC should employ a comprehensive approach encompassing 3 PT, P2P, and buy-back to maximize the total profit. On the energy trading platform, the relationship between residential and industrial prosumers is mutually beneficial, with the P2P scheme allowing residents to sell electricity while the industry approaches a lower electricity price from peer channels. Overall, understanding the energy preferences of prosumers should provide flexible and reliable power supply options for different groups of prosumers.

Suggested Citation

  • Tsao, Yu-Chung & Ai, Ho Thi Thu & Lu, Jye-Chyi & Wang, Chao, 2024. "Game theory-based electricity pricing decisions incorporating prosumer energy preferences and renewable portfolio standard," Energy, Elsevier, vol. 306(C).
    • Handle: RePEc:eee:energy:v:306:y:2024:i:c:s0360544224021923
    DOI: 10.1016/j.energy.2024.132418
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    References listed on IDEAS

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