Equilibrium Analysis of Electricity Markets With Microgrids Based on Distributed Algorithm

Microgrid is an effective way to accommodate distributed renewable energy, and there is a need for microgrids to participate in electricity market competition to ensure its sustainable development. For this purpose, a market trading framework is presented where microgrids sell electricity by submitting bids in the distribution electricity market (DEM) while generators compete by submitting bids in the day-ahead wholesale market (DAWM). The retailers are considered to submit bids in the two markets to buy electricity to meet the demand of customers and an arbitrageur is introduced to buy and sell electricity between the DEM and the DAWM. Based on the market framework, a joint equilibrium model for the DEM and the DAWM is proposed. Moreover, the equilibrium problem is converted into a convex optimization problem, and the existence and uniqueness of Nash equilibrium for the DWAM and the DEM is theoretically demonstrated. Due to information asymmetry in practice, a distributed algorithm is applied to find equilibrium outcomes. Finally, numerical examples are presented to verify the effectiveness of the proposed model and algorithm.