How do uncertain renewable energy induced risks evolve in a two-stage deregulated wholesale power market

Integrating renewable power into power market transactions is significant in terms of achieving carbon peaking and carbon neutrality. However, the integration of intermittent renewable energy sources (RES) introduces instability into power generation and brings certain risks to deregulated power market transactions. This study aims to identify the risks arising from RES power integration and analyze how these risks transmit and evolve in deregulated power markets. A Cournot game model is constructed to analyze the generation decisions of a thermal power generation company (GENCO) and a wind power GENCO in a two-stage power market. According to the results, in the mid-to-long-term power market, an increase in the uncertainty of wind power generation (WPG) could reduce wind power supply, increase the clearing price and decrease the power demand. Then, in the spot power market, the increased uncertainty related to WPG might decrease the amount of wind power traded, increase the marginal generation cost of the thermal power GENCO, raise the clearing price, and reduce the market demand for power. Finally, the uncertainty related to wind power generation could result in diminished revenue for the wind power GENCO and a loss in overall social welfare in the two-stage power market transaction.