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Review | Open Access

The competition and equilibrium in power markets under decarbonization and decentralization

Qixin Chen1( ), Xichen Fang1, Hongye Guo1, Kedi Zheng1, Qinghu Tang1, Ruike Lyu1, Kaikai Pan2, Peter Palensky3, Daniel S. Kirschen4, Chongqing Kang1
Department of Electrical Engineering, Tsinghua University, Beijing 100084, China
College of Electrical Engineering, Zhejiang University, Hangzhou 310058, China
Department of Electrical Sustainable Energy, Delft University of Technology, 2600 AA Delft, The Netherlands
Department of Electrical and Computer Engineering, University of Washington, Seattle, WA 98195, USA
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Abstract

Equilibrium analysis has been widely studied as an effective tool to model gaming interactions and predict market results. However, as competition modes are fundamentally changed by the decarbonization and decentralization of power systems, analysis techniques must evolve. This article comprehensively reviews recent developments in modelling methods, practical settings and solution techniques in equilibrium analysis. Firstly, we review equilibrium in the evolving wholesale power markets which feature new entrants, novel trading products and multi-stage clearing. Secondly, the competition modes in the emerging distribution market and distributed resource aggregation are reviewed, and we compare peer-to-peer clearing, cooperative games and Stackelberg games. Furthermore, we summarize the methods to treat various information acquisition degrees, risk preferences and rationalities of market participants. To deal with increasingly complex market settings, this review also covers refined analytical techniques and agent-based models used to compute the equilibrium. Finally, based on this review, this paper summarizes key issues in the gaming and equilibrium analysis in power markets under decarbonization and decentralization.

Keywords

Power marketshigh renewable penetrationequilibrium analysismodelling methodssolution techniquesrecent developments

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iEnergy
Volume 1 Issue 2,
June 2022
Pages 188-203
DOI: 10.23919/IEN.2022.0025
Cite this article:
Chen Q, Fang X, Guo H, et al. The competition and equilibrium in power markets under decarbonization and decentralization. iEnergy, 2022, 1(2): 188-203. https://doi.org/10.23919/IEN.2022.0025

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Received: 06 June 2022
Revised: 27 June 2022
Accepted: 17 July 2022
Published: 01 August 2022
© The author(s) 2022

The articles published in this open access journal are distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/).
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