Two-stage Nash equilibrium optimization models for motivating energy-saving and emission-reducing trading of generation

Power exchange needs to design a mechanism, which can achieve the internalization of environmental costs of power generation enterprises, thus maximizing the social environmental benefits. Two-stage optimization models of energy-saving and emission-reducing for coal-fired power plant are established. In the first stage model, maximums of the social environmental benefits and energy-saving effect are taken as the objective functions with consideration of the unit output constraints, load constraints and emissions constraints, etc. In the second stage model, maximums of power generation enterprises' profits are taken as the objective functions with the constraints of KKT conditions of the first stage model. The proposed marginal incentive pricing mechanism not only controls SO(2) emissions from the total amount, but also improves emissions treatment initiative of coal-fired power generation enterprises. A numerical example shows that the proposed model and algorithm can achieve the effect of saving energy, redu