Game-Theoretic Analysis of Bidding Strategy for Prosumers Acting as Sellers in Electricity Markets

Prosumers are usually flexible, which play important roles in the new type power systems. To stimulate the development of prosumers based on market mechanisms, it will become a trend for prosumers to participate in electricity markets via strategic bidding. To address the bidding strategies of prosumers acting as sellers and their impacts in electricity markets, a game-theoretic equilibrium model for a day-ahead electricity market is presented, in which a prosumer acting as a seller in the market is considered and the supply function bidding (i.e. quantity-price bidding) form is assumed for each seller. Specifically, the prosumer's dual characters of power generation and consumption are explicitly modelled in its bidding strategy optimization problem. The equilibrium model is solved by the non-linear complementarity method. Finally, numerical simulations are presented to verify the effectiveness of the model. It is shown that compared with conventional power generators, the prosumer with load demand will bid more aggressively and thus enhance market competition. Compared with the case where quantity bidding is applied to the prosumer, the prosumer's supply function bidding is more helpful in mitigating market power of generators, reducing market price, and increasing social welfare.