Multiplayer Nash–Stackelberg Game Analysis of Electricity Markets With the Participation of a Distribution Company

Abstract

The integration of a large number of distributed energy resources into the distribution system poses operational challenges and creates opportunities to generate profits in the electricity market. In this study, a multileader one-follower model is built to elaborate the Nash–Stackelberg game of the electricity market, where a distribution company participates in a competition with a generation company. The distribution company, as one leader, decides on the bidding price and quantity to maximize its profits in the market by integrating the distributed energy resources of multiple distribution systems after satisfying the local demand, whereas the generation company, as another leader, participates in the competitive market. As the follower, the independent system operator clears electricity markets. Moreover, a tailored algorithm is proposed to obtain the global Nash equilibrium point of the multileader one-follower Nash–Stackelberg game model. First, the proposed game model is transformed into a generalized Nash equilibrium game model; then, the transformed game model is converted to a potential game model for a solution. Finally, case studies on a constructed transmission and distribution joint system and a practical transmission and distribution joint system are performed to demonstrate the effectiveness and scalability of the proposed model and algorithm.