IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v312y2024ics0360544224032985.html
   My bibliography  Save this article

Strategic behaviors of renewable energy generation companies participating in the electricity and carbon coupled markets based on non-cooperative game theory

Author

Listed:
  • Wang, Peng
  • Guo, Zixuan
  • Zhang, Shengyu
  • Zhu, Lin
  • Yi, Liqi
  • Song, Xiaohua

Abstract

Renewable energy (RE) can participate in electricity and carbon market trading in China, which can help stimulate the investment of RE. Thus, we propose a bi-level model for non-cooperative game interactions among power generation companies (GenCos), considering the electricity and carbon coupled markets. The upper-level model considers strategic behaviors driven by maximizing profits for GenCos. The lower-level model includes a two-stage electricity market: the day-ahead market and the real-time market; it implements joint clearing of energy and reserves, and continuous trading with competitive auctions in the carbon market based on the clearing results of the electricity market. Simulations are performed based on the actual data of the power system in a certain region of Guangdong Province in China. The results show that electricity and carbon coupled markets can effectively reduce market costs and carbon emissions, improve the society welfare and RE benefits. The uncertain increase in RE output and higher installed capacity reduce the total revenue of the RE in the coupled markets. The initial carbon quota decomposition optimization decision of the coal-fired GenCos and gradual reduction in the initial carbon quota will increase the revenue of the RE GenCos.

Suggested Citation

  • Wang, Peng & Guo, Zixuan & Zhang, Shengyu & Zhu, Lin & Yi, Liqi & Song, Xiaohua, 2024. "Strategic behaviors of renewable energy generation companies participating in the electricity and carbon coupled markets based on non-cooperative game theory," Energy, Elsevier, vol. 312(C).
    • Handle: RePEc:eee:energy:v:312:y:2024:i:c:s0360544224032985
    DOI: 10.1016/j.energy.2024.133522
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544224032985
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2024.133522?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ibikunle, Gbenga, 2015. "Opening and closing price efficiency: Do financial markets need the call auction?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 34(C), pages 208-227.
    2. Yang, Xinyu & Jiang, Ping & Pan, Yao, 2020. "Does China's carbon emission trading policy have an employment double dividend and a Porter effect?," Energy Policy, Elsevier, vol. 142(C).
    3. Yihsu Chen & Jos Sijm & Benjamin Hobbs & Wietze Lise, 2008. "Implications of CO 2 emissions trading for short-run electricity market outcomes in northwest Europe," Journal of Regulatory Economics, Springer, vol. 34(3), pages 251-281, December.
    4. Xenophon, Aleksis Kazubiernis & Hill, David John, 2019. "Emissions reduction and wholesale electricity price targeting using an output-based mechanism," Applied Energy, Elsevier, vol. 242(C), pages 1050-1063.
    5. Yan, Yue & Sun, Mei & Guo, Zhilong, 2022. "How do carbon cap-and-trade mechanisms and renewable portfolio standards affect renewable energy investment?," Energy Policy, Elsevier, vol. 165(C).
    6. Fan, Jinyang & Liu, Wei & Jiang, Deyi & Chen, Junchao & Ngaha Tiedeu, William & Chen, Jie & JJK, Deaman, 2018. "Thermodynamic and applicability analysis of a hybrid CAES system using abandoned coal mine in China," Energy, Elsevier, vol. 157(C), pages 31-44.
    7. Dong, Zhaoyingzi & Xia, Chuyu & Fang, Kai & Zhang, Weiwen, 2022. "Effect of the carbon emissions trading policy on the co-benefits of carbon emissions reduction and air pollution control," Energy Policy, Elsevier, vol. 165(C).
    8. Song, Xiaohua & Wang, Peng, 2023. "Effectiveness of carbon emissions trading and renewable energy portfolio standards in the Chinese provincial and coupled electricity markets," Utilities Policy, Elsevier, vol. 84(C).
    9. RUIZ, Carlos & CONEJO, Antonio J. & SMEERS, Yves, 2012. "Equilibria in an oligopolistic electricity pool with stepwise offer curves," LIDAM Reprints CORE 2395, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. Chen, Xing & Lin, Boqiang, 2021. "Towards carbon neutrality by implementing carbon emissions trading scheme: Policy evaluation in China," Energy Policy, Elsevier, vol. 157(C).
    11. Andrianesis, Panagiotis & Biskas, Pandelis & Liberopoulos, George, 2021. "Evaluating the cost of emissions in a pool-based electricity market," Applied Energy, Elsevier, vol. 298(C).
    12. Zhang, Xinyue & Guo, Xiaopeng & Zhang, Xingping, 2023. "Bidding modes for renewable energy considering electricity-carbon integrated market mechanism based on multi-agent hybrid game," Energy, Elsevier, vol. 263(PA).
    13. Wan, Tong & Tao, Yuechuan & Qiu, Jing & Lai, Shuying, 2023. "Internet data centers participating in electricity network transition considering carbon-oriented demand response," Applied Energy, Elsevier, vol. 329(C).
    14. Li, Wei & Lu, Can & Zhang, Yan-Wu, 2019. "Prospective exploration of future renewable portfolio standard schemes in China via a multi-sector CGE model," Energy Policy, Elsevier, vol. 128(C), pages 45-56.
    15. Tsimopoulos, Evangelos G. & Georgiadis, Michael C., 2019. "Optimal strategic offerings for a conventional producer in jointly cleared energy and balancing markets under high penetration of wind power production," Applied Energy, Elsevier, vol. 244(C), pages 16-35.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wu, Jianxian & Nie, Xin & Wang, Han, 2023. "Curse to blessing: The carbon emissions trading system and resource-based cities' carbon mitigation," Energy Policy, Elsevier, vol. 183(C).
    2. Mengmeng Qiang & Hangyi Lai & Zhenxi Lyu, 2025. "Carbon Emissions Trading and Employment: Evidence from China," Sustainability, MDPI, vol. 17(4), pages 1-19, February.
    3. Gao, Ming, 2023. "The impacts of carbon trading policy on China's low-carbon economy based on county-level perspectives," Energy Policy, Elsevier, vol. 175(C).
    4. Wang, Benke & Li, Chunhua & Ban, Yongshuang & Zhao, Zeming & Wang, Zengxu, 2024. "A two-tier bidding model considering a multi-stage offer‑carbon joint incentive clearing mechanism for coupled electricity and carbon markets," Applied Energy, Elsevier, vol. 368(C).
    5. Andrianesis, Panagiotis & Biskas, Pandelis & Liberopoulos, George, 2021. "Evaluating the cost of emissions in a pool-based electricity market," Applied Energy, Elsevier, vol. 298(C).
    6. Sun, Chuanwang & Zeng, Yingfang, 2023. "Does the green credit policy affect the carbon emissions of heavily polluting enterprises?," Energy Policy, Elsevier, vol. 180(C).
    7. Du, Zhili & Wang, Yao, 2022. "Does energy-saving and emission reduction policy affects carbon reduction performance? A quasi-experimental evidence in China," Applied Energy, Elsevier, vol. 324(C).
    8. Wang, Kai-Hua & Liu, Lu & Zhong, Yifan & Lobonţ, Oana-Ramona, 2022. "Economic policy uncertainty and carbon emission trading market: A China's perspective," Energy Economics, Elsevier, vol. 115(C).
    9. El Khatib, Sameh & Galiana, Francisco D., 2019. "Investigating emission regulation policy in the electricity sector: modeling an oligopolistic electricity market under hourly cap-and-trade," Energy Economics, Elsevier, vol. 78(C), pages 428-443.
    10. Zhou, Xianyang & Zhou, Dequn & Ding, Hao & Zhao, Siqi & Wang, Qunwei, 2023. "Low-carbon transition of China's provincial power sector under renewable portfolio standards and carbon cap," Energy, Elsevier, vol. 283(C).
    11. Gao, Zhiyuan & Zhao, Ying & Li, Lianqing & Hao, Yu, 2024. "Economic effects of sustainable energy technology progress under carbon reduction targets: An analysis based on a dynamic multi-regional CGE model," Applied Energy, Elsevier, vol. 363(C).
    12. Rabia Shahid & Shijie Li & Jian Gao & Muhammad Ahsan Altaf & Atif Jahanger & Awais Shakoor, 2022. "The Carbon Emission Trading Policy of China: Does It Really Boost the Environmental Upgrading?," Energies, MDPI, vol. 15(16), pages 1-13, August.
    13. Li Meng & Ke Wang & Taoyong Su & He He, 2022. "Carbon Emission Trading and Corporate Financing: Evidence from China," Energies, MDPI, vol. 15(14), pages 1-13, July.
    14. Hu, Yucai & Li, Ranran & Du, Lei & Ren, Shenggang & Chevallier, Julien, 2022. "Could SO2 and CO2 emissions trading schemes achieve co-benefits of emissions reduction?," Energy Policy, Elsevier, vol. 170(C).
    15. Song, Xiaohua & Wang, Peng, 2023. "Effectiveness of carbon emissions trading and renewable energy portfolio standards in the Chinese provincial and coupled electricity markets," Utilities Policy, Elsevier, vol. 84(C).
    16. Yu-Jie Hu & Lishan Yang & Fali Duan & Honglei Wang & Chengjiang Li, 2022. "A Scientometric Analysis and Review of the Emissions Trading System," Energies, MDPI, vol. 15(12), pages 1-20, June.
    17. Su, Q. & Zhou, P. & Ding, H. & Xydis, G., 2024. "Transition towards a hybrid energy system: Combined effects of renewable portfolio standards and carbon emission trading," Energy Economics, Elsevier, vol. 135(C).
    18. Wu, Shu & Hu, Fangfang & Zhang, Zhijian, 2024. "Visible hand or invisible hand in climate governance? Evidence from China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 204(C).
    19. Shanglei Chai & Ruixuan Sun & Ke Zhang & Yueting Ding & Wei Wei, 2022. "Is Emissions Trading Scheme (ETS) an Effective Market-Incentivized Environmental Regulation Policy? Evidence from China’s Eight ETS Pilots," IJERPH, MDPI, vol. 19(6), pages 1-18, March.
    20. Guo, Xiaopeng & Zhang, Xinyue & Zhang, Xingping, 2024. "Incentive-oriented power‑carbon emissions trading-tradable green certificate integrated market mechanisms using multi-agent deep reinforcement learning," Applied Energy, Elsevier, vol. 357(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:312:y:2024:i:c:s0360544224032985. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.