A Non-Cooperative Game-Based Retail Pricing Model for Electricity Retailers Considering Low-Carbon Incentives and Multi-Player Competition

This paper addresses the retail pricing problem for electricity retailers who also act as virtual power plant (VPP) operators, aggregating distributed energy resources (DERs). In future power markets where multiple such retailers compete for customers, a key challenge is to design pricing strategies that balance economic profitability with low-carbon objectives. Existing research often overlooks the impact of retailers’ heterogeneous resource portfolios, particularly the share of low-carbon resources like photovoltaics (PVs), on their competitive advantage and pricing decisions. To bridge this gap, we propose a novel retail pricing model that integrates a non-cooperative game framework with Markov Decision Processes (MDPs). The model enables each retailer to formulate optimal real-time pricing strategies by anticipating competitors’ actions and customer responses, ultimately reaching a Nash equilibrium. A distinctive feature of our approach is the incorporation of spatially differentiated carbon emission factors, which are adjusted based on each retailer’s share of PV generation. This creates a tangible low-carbon incentive, allowing retailers with greener resource mixes to leverage their environmental advantage. The proposed framework is validated on a modified IEEE 30-bus system with six competing retailers. Simulation results demonstrate that our method effectively incentivizes optimal load distribution, alleviates network congestion, and improves branch loading indices. Critically, retailers with a higher share of PV resources achieved significantly higher profits, directly translating their low-carbon advantage into economic value. Notably, the Branch Load Index (BLI) was reduced by 12% and node voltage deviations were improved by 1.32% at Bus 12, demonstrating the model’s effectiveness in integrating economic and low-carbon objectives.