Time-Of-Use pricing in an energy sustainable supply chain with government interventions: A game theory approach

Abstract

In this study, the game theory approach has been used to perform Time-Of-Use (TOU) pricing for renewable and conventional energy supply chains with government intervention to achieve sustainable development goals. Also, a Demand Response Program (DRP) based on TOU pricing has been implemented to improve the profits of power producers and the energy consumption pattern of end customers. Decision variables included the price of conventional and renewable energy during low- and high-load periods, tax rate, and subsidies. These variables are determined in three scenarios with the goals of maximizing government revenue, maximizing social welfare, minimizing environmental impacts, and under two-game structures of cooperative and Nash between the producers. The equilibrium solutions of each game for the three scenarios were obtained by backward induction. The results showed that decisions related to energy prices and tariffs play a major role in achieving the goals of sustainable development, profits of supply chain members, and success in meeting consumer demand. For all three scenarios, the government revenue function and the social welfare functions earn higher values in the Nash game than in the cooperative game, but the environmental impacts and the producers' profit function earn respectively lower and higher values in the cooperative game.