EQUILIBRIUM DECISIONS OF POWER SUPPLY CHAIN MEMBERS FACING THE UNCERTAINTY RISK OF RENEWABLE ENERGY PRODUCTION

Abstract

Since renewable energy production is uncertain, this uncertainty can have a signi cant impact on the operational decisions of power supply chain members. However, most of the existing studies have not characterized the risks brought by the uncertainty of renewable energy production, and they have paid little attention to the impact of power supply chain members’ attitudes facing these risks on their operational decisions. Therefore, this study uses Stackelberg game and mean-variance theory to investigate the equilibrium decisions of power supply chain members (a power plant and power retailer) with di erent risk attitudes (risk-neutral and risk-averse) under four di erent scenarios facing the uncertainty risk of renewable energy production, and we nd that the risk attitude of the power plant has no inuence on the equilibrium decisions of the power supply chain members, that is, the power procurement price and the power output at equilibrium are only related to the risk attitude of the retailer; a retailer with a risk-neutral attitude can earn more pro ts, and the power plant can increase its power output if the retailer is risk-averse. Our ndings indicate that retailers and power plants should be comprehensive consideration the uncertainty risk of renewable energy production and related decisions to make optimal operational decisions.