To read this content please select one of the options below:

Pricing contract design of a multi-supplier-multi-retailer supply chain in hybrid electricity market

Zhenning Zhu (School of Economics, Zhejiang University of Technology, Hangzhou, China) (Business School, East China University of Science and Technology, Shanghai, China)
Lingcheng Kong (Business School, East China University of Science and Technology, Shanghai, China)
Gulizhaer Aisaiti (School of Business Administration, Xinjiang University of Finance and Economics, Urumqi, China) (College of Business, Shanghai University of Finance and Economics, Shanghai, China)
Mingzhen Song (School of Business Administration, Xinjiang University of Finance and Economics, Urumqi, China) (College of Business, Shanghai University of Finance and Economics, Shanghai, China)
Zefeng Mi (School of Economics, Zhejiang University of Technology, Hangzhou, China)

Industrial Management & Data Systems

ISSN: 0263-5577

Article publication date: 28 May 2021

Issue publication date: 5 July 2021

518

Abstract

Purpose

In the hybrid electricity market consisting of renewable and conventional energy, the generation output of renewable power is uncertain because of its intermittency, and the power market demand is also fluctuant. Meanwhile, there is fierce competition among power producers in the power supply market and retailers in the demand market after deregulation, which increases the difficulty of renewable energy power grid-connection. To promote grid-connection of renewable energy power in the hybrid electricity market, the authors construct different contract decision-making models in the “many-to-many” hybrid power supply chain to explore the pricing strategy of renewable energy power grid-connecting.

Design/methodology/approach

Considering the dual-uncertainty of renewable energy power output and electricity market demand, the authors construct different decision-making models of wholesale price contract and revenue-sharing contract to compare and optimize grid-connecting pricing, respectively, to maximize the profits of different participants in the hybrid power supply chain. Besides, the authors set different parameters in the models to explore the influence of competition intensity, government subsidies, etc. on power pricing. Then, a numerical simulation is carried out, they verify the existence of the equilibrium solutions satisfying the supply chain coordination, compare the differences of pricing contracts and further analyze the variation characteristics of optimal contract parameters and their interaction relations.

Findings

Revenue-sharing contract can increase the quantity of green power grid-connection and realize benefits Pareto improvement of all parties in hybrid power supply chain. The competition intensity both of power supply and demand market will have an impact on the sharing ratio, and the increase of competition intensity results in a reduction of power supply chain coordination pressure. The power contract price, spot price and selling price have all been reduced with the increase of the sharing ratio, and the price of renewable power is more sensitive to the ratio change. The sharing ratio shows a downward trend with the increase of government green power subsidies.

Originality/value

On the basis of expanding the definition of hybrid power market and the theory of newsvendor model, considering the dual-uncertainty of green power generation output and electricity market demand, this paper builds and compares different contract decision-making models to study the grid-connection pricing strategy of renewable energy power. And as an extension of supply chain structure types and management, the authors build a “many-to-many” power supply chain structure model and analyze the impact of competition intensity among power enterprises and the government subsidy on the power grid-connecting pricing.

Keywords

Acknowledgements

The work was supported by Humanities and Social Sciences Foundation of Ministry of Education in China (Grant No. 18YJA790042), National Natural Science Foundation of China (Grant No. 72003176; 72073044), Humanities and Social Sciences Pre-research Fund in 2020 of Zhejiang University of Technology (Grant No. SKY-ZX-20200147) and the General Scientific Research Project of Zhejiang Education Department in 2020 (Grant No. Y202043917).

Citation

Zhu, Z., Kong, L., Aisaiti, G., Song, M. and Mi, Z. (2021), "Pricing contract design of a multi-supplier-multi-retailer supply chain in hybrid electricity market", Industrial Management & Data Systems, Vol. 121 No. 7, pp. 1522-1551. https://doi.org/10.1108/IMDS-09-2020-0543

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

Related articles