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Optimal Operation of Generation Company’s Participating in Multiple Markets with Allocation and Exchange of Energy-Consuming Rights and Carbon Credits

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  • Hanyu Yang

    (College of Electrical Engineering and Control Science, Nanjing Tech University, Nanjing 211816, China)

  • Mengru Ding

    (College of Electrical Engineering and Control Science, Nanjing Tech University, Nanjing 211816, China)

  • Muyao Li

    (China Electric Power Research Institute (Nanjing), Nanjing 210003, China)

  • Shilei Wu

    (College of Electrical Engineering and Control Science, Nanjing Tech University, Nanjing 211816, China)

  • Ye Zhang

    (Inner Mongolia Power Electric Operations Control Company, Inner Mongolia Electric Power (Group) Co., Ltd., Hohhot 010010, China)

  • Xun Dou

    (College of Electrical Engineering and Control Science, Nanjing Tech University, Nanjing 211816, China)

Abstract

The proposal of the energy-consuming right (ECR) market may lead to generation companies (GenCos) facing the risk of being overcharged due to the inaccurate calculation of carbon emission reduction, since it claims the same credit as the carbon market does. To estimate the carbon emission reduction accurately for the GenCos that participate in electricity, carbon, and ECR markets simultaneously, this paper proposes a market framework where a flexible exchange mechanism between the ECR and carbon markets is specially considered. To investigate the influence of the allocation and exchange of ECR and carbon credits on the behavior of GenCos that participate in multi-type markets, a bi-level model based on the leader–follower game theory is proposed. In the upper level of the proposed model, a decision problem for maximizing the profit of GenCos is developed, which is especially constrained to the primary allocation of ECR and carbon credits. While the multi-type market clearing model and an exchange mechanism between the ECR and carbon credits are proposed in the lower level of the model. The bi-level problem is converted into the mathematical program with equilibrium constraints (MPECs) through the Karush–Kuhn–Tucker (KKT) condition to solve. The results illustrate that the interaction between the ECR market and the carbon market can improve the energy efficiency and reduce the carbon emissions of GenCos.

Suggested Citation

  • Hanyu Yang & Mengru Ding & Muyao Li & Shilei Wu & Ye Zhang & Xun Dou, 2024. "Optimal Operation of Generation Company’s Participating in Multiple Markets with Allocation and Exchange of Energy-Consuming Rights and Carbon Credits," Energies, MDPI, vol. 17(23), pages 1-19, November.
    • Handle: RePEc:gam:jeners:v:17:y:2024:i:23:p:5884-:d:1527741
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    References listed on IDEAS

    as
    1. Zhao, Yibing & Wang, Can & Sun, Yuwei & Liu, Xianbing, 2018. "Factors influencing companies' willingness to pay for carbon emissions: Emission trading schemes in China," Energy Economics, Elsevier, vol. 75(C), pages 357-367.
    2. Menegaki, Angeliki N. & Ahmad, Nisar & Aghdam, Reza FathollahZadeh & Naz, Amber, 2021. "The convergence in various dimensions of energy-economy-environment linkages: A comprehensive citation-based systematic literature review," Energy Economics, Elsevier, vol. 104(C).
    3. Guo, Hongye & Chen, Qixin & Shahidehpour, Mohammad & Xia, Qing & Kang, Chongqing, 2022. "Bidding behaviors of GENCOs under bounded rationality with renewable energy," Energy, Elsevier, vol. 250(C).
    4. Wang, Kaike & Su, Xuewei & Wang, Shuhong, 2023. "How does the energy-consuming rights trading policy affect China's carbon emission intensity?," Energy, Elsevier, vol. 276(C).
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