Electricity-carbon coupled markets-oriented co-optimization of retrofit and bidding strategies for coal-fired power plant

Participation of coal-fired power plant in electricity-carbon coupled markets, synergized with retrofit implementation, constitutes an inevitable pathway to enhance market competitiveness and achieve a low-carbon transition. However, existing research focuses only on isolated aspects, neglecting the tight coupling between retrofit and bidding. In reality, retrofit alters electricity-carbon coupled market bidding strategies through operational recalibration, while bidding strategies, by driving clearing prices, in turn steer retrofit. This neglect curtails the benefits of bidirectional interaction and hampers market benefit maximization, revealing a substantial gap. To fill this gap, this paper initially explores the coupling mechanism of retrofit and bidding strategies; subsequently, an approach for quantifying their mutual influence is provided, upon which, by embedding the interaction dynamics, a bi-level co-optimization model with two-stage distributionally robust optimization approach is constructed. Simulation results show that: (1) considering the coupling between retrofit and bidding strategies elevated the total revenue of the coal-fired power plant by 19.11 %, with a 9.87 % increase in electricity market revenue and a 63.04 % increase in carbon market revenue, and (2) sharply increases the carbon market clearing price but minimally affects the electricity market clearing price. In summary, co-optimization of the retrofit and bidding strategies based on their coupling significantly enhances the performance of coal-fired power plant in the coupled market, offering a practical solution to their profit dilemma.