Optimizing Electricity Markets Through Game-Theoretical Methods: Strategic and Policy Implications for Power Purchasing and Generation Enterprises
Authors: Cheng Lefeng , Huang Pengrong , Zhang Mengya , Yang Ru , Wang Yafei 
Published: January 2025

This review proposes a novel integration of game-theoretical methods—specifically Evolutionary Game Theory (EGT), Stackelberg games, and Bayesian games—with deep reinforcement learning (DRL) to optimize electricity markets. Our approach uniquely addresses the dynamic interactions among power purchasing and generation enterprises, highlighting both theoretical underpinnings and practical applications. We demonstrate how this integrated framework enhances market resilience, informs evidence-based policy-making, and supports renewable energy expansion. By explicitly connecting our findings to regulatory strategies and real-world market scenarios, we underscore the political implications and applicability of our results in diverse global electricity systems. By integrating EGT with advanced methodologies such as DRL, this study develops a comprehensive framework that addresses both the dynamic nature of electricity markets and the strategic adaptability of market participants. This hybrid approach allows for the simulation of complex market scenarios, capturing the nuanced decision-making processes of enterprises under varying conditions of uncertainty and competition. The review systematically evaluates the effectiveness and cost-efficiency of various control policies implemented within electricity markets, including pricing mechanisms, capacity incentives, renewable integration incentives, and regulatory measures aimed at enhancing market competition and transparency. Our analysis underscores the potential of EGT to significantly enhance market resilience, enabling electricity markets to better withstand shocks such as sudden demand fluctuations, supply disruptions, and regulatory changes. Moreover, the integration of EGT with DRL facilitates the promotion of sustainable energy integration by modeling the strategic adoption of renewable energy technologies and optimizing resource allocation. This leads to improved overall market performance, characterized by increased efficiency, reduced costs, and greater sustainability. The findings contribute to the development of robust regulatory frameworks that support competitive and efficient electricity markets in an evolving energy landscape. By leveraging the dynamic and adaptive capabilities of EGT and DRL, policymakers can design regulations that not only address current market challenges but also anticipate and adapt to future developments. This proactive approach is essential for fostering a resilient energy infrastructure capable of accommodating rapid advancements in renewable technologies and shifting consumer demands. Additionally, the review identifies key areas for future research, including the exploration of multi-agent reinforcement learning techniques and the need for empirical studies to validate the theoretical models and simulations discussed. This study provides a comprehensive roadmap for optimizing electricity markets through strategic and policy-driven interventions, bridging the gap between theoretical game-theoretic models and practical market applications.