UC Santa Cruz

Prosumers, with the ability to act both as a supplier and a consumer in a power market, have received considerable attention recently. Having distributed energy resources, their capability to operate in an isolated mode, separated from the main grid, has also been promoted as a vital option to enhance the power system's resilience. One emerging concern is the prosumer's ability to manipulate the power market as a buyer or as a seller. This thesis vets the outcomes of a power market in presence of strategic prosumers and formulates electricity markets in different frameworks depending on the prosumer's strategy to obtain the equilibria representing the market outcome.

This thesis posits a situation in which a strategic prosumer owns a renewable unit with variant output and a dispatchable backup unit, and participates in a power market following a price-taker, quantity-based, or Stackelberg strategy. The prosumer is assumed to maximize its benefit by deciding amount of power to buy from or sell into the main grid, amount of renewable power to forego consumption, and amount of power to produce from backup unit. The interaction of prosumers and the main grid is modeled through shifting the residual supply curve in the wholesale market, thereby avoiding the possible numerical issues when aggregating their demand horizontally with consumers. The model is applied to a case study of the IEEE 24-bus RTS as an illustrative example. Prosumers in the market are also subject to uncertain renewable output and, as they participate in the day-ahead market, decide how much energy to consume, sell, or purchase, considering the potential imbalance due to uncertain output. The question of prosumer's risk preferences, taking into account the uncertainty in its renewable output, is investigated and the dynamics between prosumer's risk decisions and its implications for the prosumer's profit maximization are examined in a chance-constrained framework.

This thesis illustrates power market outcomes in presence of strategic prosumers following price-taker, quantity-based, and Stackelberg strategies exercised by the prosumer and shows existence of market-clearing equilibria in the case of perfect and imperfect competition and demonstrate that the prosumer's position in the market does not depend on its strategy along with the fact that the prosumer is able to attain higher pay-off in the price-taker case compared to the quantity-based strategy. This thesis also shows the impact of prosumer's Stackelberg strategy on rent distribution and price formation in the marketplace in a chance-constrained framework to account for uncertainty of its renewable output. Finally, the thesis investigates prosumer risk attitudes and quantifies the impact of renewable output uncertainty and imbalance prices on prosumer's risk preferences.