Electricity supply chain coordination with carbon abatement technology investment under the benchmarking mechanism

Wei Chen; Yongkai Ma; Weihao Hu

doi:10.3934/jimo.2020175

Article Contents

2022, Volume 18, Issue 2: 713-730. Doi: 10.3934/jimo.2020175

This issue Previous Article Next Article Perturbation of Image and conjugate duality for vector optimization

Electricity supply chain coordination with carbon abatement technology investment under the benchmarking mechanism

1.
School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, 611731, China
2.
School of Mechanical and Electrical Engineering, University of Electronic Science and Technology of China, Chengdu, 611731, China

^* Corresponding author: Yongkai Ma
^* Corresponding author: Yongkai Ma

Received: July 2020

Revised: October 2020

Early access: December 7, 2020

Published online: December 7, 2020

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Abstract

The introduction of the benchmarking mechanism into the electricity industry has influenced whether utility firms choose to invest in carbon abatement technology. This study presents an electricity supply chain that includes a utility firm as the leader and a retailer as the follower to decide on the electricity price and carbon abatement technology investment. The study discusses the impact of the benchmarking mechanism on the decision-making of the electricity supply chain enterprises. The main conclusions are as follows: (1) Investing in carbon abatement technology increased electricity demand, customer surplus, and profits of the electricity supply chain enterprises. (2) Carbon abatement technology investment and profits of the supply chain enterprises increased with the unit carbon quota. (3) A revenue-sharing and cost-sharing contract could be used to coordinate the electricity supply chain.

Keywords:

Mathematics Subject Classification: Primary: 91A12, 90B06; Secondary: 90B50.

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Figure 1. Electricity supply chain with two strategies

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Figure 2. Electricity price $ p $ as $ e_0 $

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Figure 3. Electricity demand $ q $ as $ e_0 $

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Figure 4. Carbon abatement technology investment $ \xi $ as $ e_0 $

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Figure 5. The supply chain enterprises' profits as $ e_0 $

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Figure 6. Price sensitivity

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Figure 7. Carbon abatement technology sensitivity

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Table 1. Notation and description of parameters

Notation	Description
$ q $	Electricity demand
$ a $	Potential electricity demand
$ b $	Sensitivity coefficient of electricity price
$ c $	Cost coefficient of electricity production
$ k $	Cost coefficient of carbon abatement technology investment
$ e_0 $	Unit carbon emission-free quota under the BM
$ e $	Initial unit carbon emission
$ t $	Carbon price
$ \pi _R $	Profit of the electricity retailer
$ \pi _U $ $ \pi _S $	Profit of the utility firm Profit of the supply chain
Decision Variables
$ p $	Electricity price
$ w $	Electricity wholesale price
$ \xi $	Carbon abatement technology investment

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