STRATEGIES CONSIDERING ELECTRICITY QUALITY

Abstract

The introduction of tradable electricity platforms in China has enriched the channels for consumers to purchase electricity and intensified the competition among channels. The quality of electricity is an essential factor affecting consumer purchasing behavior. This paper mainly focuses on the inuence of the competition among channels on electricity quality.We construct a dual-channel electricity supply chain, in which electricity generators sell electricity directly to consumers or resell it through electricity retailers. We use the backward induction method of game theory to solve the equilibrium solutions in centralized, decentralized, and coordinated decisions. By analyzing and comparing the equilibrium solutions, we draw the following conclusions; (1) Electricity quality, electricity price, electricity demand, and profits increase with the sensitivity coefficient of electricity quality and price competition coefficient. (2) Electricity quality, electricity price, electricity demand, and profits decrease with the investment cost coefficient of quality improvement. (3) The increase in transmission and distribution costs reduces the electricity quality while increasing the electricity price through both channels. Furthermore, the increase leads to an increase in electricity demand and the profit of the electricity retailer through the resale channel. However, it reduces the electricity demand and the profit of the electricity generator through the direct sales channel. (4) A combined contract consisting of revenue sharing and quality improvement investment cost-sharing can lead to coordination.