Game Analysis of Day-ahead Electricity Market under Different Bidding Modes for Retailers

The ongoing deregulation of China’s electricity markets has significantly enhanced demand-side participation, creating a diverse competitive landscape where both supply and demand sides act as strategic price makers. To systematically evaluate the market impacts of different bidding modes for retailers, this paper conducts a comparative analysis of two different bidding modes: power purchase budget bidding and demand function bidding. Day-ahead electricity market models are established for each bidding mode. All generators are assumed to participate in the market competition through supply function bidding, while retailers compete using either power purchase budget bidding or demand function bidding. The models are solved using the nonlinear complementarity method. Through numerical simulations, the effects of retailers’ bidding strategies on market equilibrium outcomes under both bidding modes are emphatically analyzed. The key findings indicate that retailers using power purchase budget bidding can more effectively reduce the monopoly power compared to those using demand function bidding. This results in lower market prices, increased profits on the demand side, and higher social welfare.