A model for CO2 emission tax and the government control in electric power supply Chain

In this paper, the electric power supply chain has multiple players, such as fuel suppliers, power generators and customers, each maximizing their individual profit. Coupling the optimal decision-making of chain members, a model of government control with CO2 emission tax in electric power supply chain is built on the basis of the Cournot game. This model shows the government's participation in and out of the game. The model is a multi-layer optimization model, whose KKT system is a mixed nonlinear complementarity problem. By using the nonlinear complementarity function to reformulate the KKT system into a set of algebraic equations, this model can be solved simply and fast. Finally, corresponding to the different operational conditions of power network, the Nash equilibrium and numerical results of this model is analyzed, and the optimal CO2 emission tax is obtained to achieve the maximization social benefits. Case studies show the successful application of the proposed model.