To do or not to do: Prosumers strategic decision to participate in the distributed electricity market

This paper proposes a strategic framework of prosumers’ optimal decision making to optimize their expected return stimulated by their choice of participation for the three given distributed electricity market (DEM) segments as, k = 1) P2P price-based real-time market, k = 2) distribution ancillary services (AS) market, and k = 3) FIT. A two-stage optimization model is designed considering asymmetrical information settings among the players. Prosumers (i ∈ I) participate in the DEM market segments to trade an optimum quantity $MCV_k^i$ with bidding strategy $\\left( {{\\alpha ^i},{\\beta ^i}} \\right)_k^{\\ast}$, which is computed considering the varying degrees of imperfect knowledge of rival’s bidding strategies (j ≠ i). In the first stage, a non-cooperative game-theoretic algorithm is used to determine prosumers’ optimal bidding strategy $\\left( {{\\alpha ^i},{\\beta ^i}} \\right)_k^{\\ast}$ using stochastic optimization based on the Monte-Carlo simulation. Further, for prosumer’s this optimum bidding strategy, in the second stage optimization model develops a prosumer’s profit yielding rational decision of participating in the DEM market segments which led to the maximization of their total expected return.