Optimizing Day-Ahead Market Scheduling: Policy Design for Renewable Energy Integration and Imbalance Cost Consideration

Abstract This study introduces a Stackelberg game-theoretic approach to crafting an imbalance pricing strategy for the energy market operator, enhancing cost efficiency in a credit score-based energy market while adhering to policy-mandated renewable energy levels. Within this framework, the market operator takes the lead by introducing a novel hybrid charging station, which will participate in the energy market and be positioned as the follower in the game. This station utilizes solar photovoltaics and grid power to serve both battery and fuel cell electric buses. This approach optimizes the station’s capacity bidding strategy to maximize profits from electricity sales in the market, taking into account the intermittency of renewable sources and the fluctuation of energy prices. The research proposes a regulatory mechanism designed to manage imbalance prices for suppliers, ensuring that the daily cleared renewable power output meets a predetermined threshold using an iterative algorithm within the credit score-based day-ahead market. Numerical simulations validate the proposed strategy, suggesting that the market operator could enhance market efficiency while the station maximizes market profits from electricity sales under the new regulation.