Equilibrium state of a price-maker energy hub in a competitive market with price uncertainties

Abstract

This study proposes the optimal bidding of a price-maker energy hub. It employs game theory for optimal biddingstrategy in a competitive and equilibrium market. The high flexibility of the energy hub helps it to make a profit from participationin the energy market. This price-maker energy hub has some energy converters and combined heat and power to deliverenergy to its loads. The strategy is that the proposed energy hub maximises its profit with the presence of other rival energyhubs. There are price uncertainties modelled by the Monte Carlo simulation. Incomplete information in the competitive market ismodelled by the game theory, which causes the problem to be stochastic and equilibrium programming. The proposed solutionfor this problem uses stochastic bi-level programming. The optimal bidding strategy of price-maker energy hub is modelled inthe upper level, and modelling of market clearance is at the lower level. The proposed algorithm has been evaluated incomparative case studies. The obtained results show the efficiency of the equilibrium environment in profit maximisation. Theeffect of price uncertainty in profit maximisation is also compared with the deterministic case study.