Power Market Model in Presence of Strategic Prosumers

Prosumers, with ability to act both as a supplier and a consumer in a power market, have received considerable attention recently. Possessing with distributed energy resources, their capability to operate in an isolated mode, shielding from the main grid, has also been promoted as a vital option to enhance the power system's resilience. One emerging concern is the prosumer's ability to manipulate the power market as a buyer or as a seller. This study vets the outcomes of a power market in presence of strategic prosumers. We formulate the optimization problem faced by the prosumers in a complementarity problem. We posit a situation in which a strategic prosumer owns a renewable unit with variant output and a dispatchable backup unit, and participates in a competitive market. The prosumer is assumed to maximize its benefit by deciding amount of power to buy from or sell into the main grid, amount of renewable power to forego consumption, and amount of power to produce from backup unit. The model is applied to a case study of the IEEE 24-bus RTS as an illustrative example. We summarize the model properties and findings in three propositions and report distributional impacts of economic rent among conventional suppliers and consumers.