A Comprehensive Study on Electricity Market Clearing and Bidding Strategies Using Nash Equilibrium

In electricity markets, the interplay between various generation units-particularly thermal and renewable sources-is pivotal in determining the market clearing price (MCP) and the allocation of generation resources. This paper presents a comprehensive model that simulates the optimization of market clearing and bidding strategies within a power market using Nash equilibrium theory. The model incorporates both thermal units (coal-fired power plants) and renewable units (solar power), with each unit seeking to maximize its profit while complying with operational constraints. We investigate the dynamics of bidding strategies and their influence on power market prices, emphasizing the role of renewable energy in reducing overall costs and shaping bidding behavior. The simulation results provide critical insights into optimal bidding strategies for market participants and underscore the importance of strategic bidding in achieving market efficiency.