Optimizing bidding strategies in hybrid power supply chains under price subsidies and renewable portfolio standards

Introduction As renewable energy generation enters a new phase of development, government policies have shifted from a single subsidy to a combination of subsidies for renewable energy consumption and renewable portfolio standards (RPS). The effectiveness of these new policies requires further exploration. Methods This study establishes a “many-to-one” electricity supply chain model under the dual policy framework of renewable energy consumption subsidies and RPS policies, involving competitive renewable energy generators, fossil-fueled generators, and electricity retailers. The model considers the randomness of renewable energy generation and the uncertainty of market demand, with equilibrium decisions derived using a single-period sequential Stackelberg game under different bidding sequences. Results The study finds that as the government increases the subsidy for the per-unit consumption of renewable energy, the wholesale prices of both renewable and fossil-fueled electricity decrease. The increased subsidy boosts electricity retailers' procurement of renewable electricity while reducing their procurement of fossil-fueled electricity. Additionally, an increase in RPS leads to a decline in wholesale prices but, contrary to intuition, reduces both renewable and fossil-fueled electricity procurement and decreases profits for all participants. Discussion Interestingly, as competition in the renewable and fossil-fueled electricity markets intensifies, when generators adopt a bidding-prioritized strategy, electricity retailers' procurement of electricity from these generators decreases. These findings suggest that policy design must carefully account for market competition and bidding strategies to optimize renewable energy adoption.