Huayan Geng

Yangjun Zeng, Huayan Geng, Yiwei Qiu et al.

Renewable power-to-ammonia (ReP2A) production offers a viable pathway to decarbonize the power and chemical sectors and is increasingly supported by carbon-emission policies. However, a carbon-related mechanism that links ReP2A producers with fossil-based gray ammonia (GA) competitors while aligning the interests of renewable power, green hydrogen, and green ammonia producers in the ReP2A process chain remains unexplored. To fill this gap, we propose a hierarchical carbon-driven incentive mechanism (PCIM) to improve the market competitiveness of green ammonia. We first construct a trading framework in which ReP2A and GA participate in both the carbon allowance (CA) and ammonia markets, which forms the outer layer. These interactions, together with electricity and hydrogen transactions in the ReP2A chain, which form the inner layer, are modeled as a hierarchical game. For tractability, the inner layer is characterized via decomposable equivalent optimization, and the outer layer is solved as a mixed-integer linear program (MILP) derived from Karush-Kuhn-Tucker conditions. Based on the resulting equilibrium, we identify the carbon-related revenue of ReP2A and propose an incentive-compatible CA allocation mechanism (PCAM) %to ensure equitable benefit sharing across the ReP2A chain. Simulations show that the PCIM reduces carbon emissions by 12.9\% at a cost of only a 1.8% decrease in sectorwide revenue, and results from the PCIM provide guidance for carbon pricing. Furthermore, the application of the PCAM increases stakeholders' willingness to participate in ReP2A production.

Huayan Geng, Yangjun Zeng, Yiwei Qiu

Renewable power-to-ammonia (ReP2A), which uses hydrogen produced from renewable electricity as feedstock, is a promising pathway for decarbonizing the energy, transportation, and chemical sectors. However, variability in renewable generation causes fluctuations in hydrogen supply and ammonia production, leading to revenue instability for both ReP2A producers and conventional fossil-based gray ammonia (GA) producers in the market. Existing studies mainly rely on engineering measures, such as production scheduling, to manage this risk, but their effectiveness is constrained by physical system limits. To address this challenge, this paper proposes a financial instrument termed \emph{renewable ammonia futures} and integrates it with production decisions to hedge ammonia output risk. Production and trading models are developed for both ReP2A and GA producers, with conditional value-at-risk (CVaR) used to represent risk preferences under uncertainty. A game-theoretic framework is established in which the two producers interact in coupled ammonia spot and futures markets, and a Nash bargaining mechanism coordinates their production and trading strategies. Case studies based on a real-world system show that introducing renewable ammonia futures increases the CVaR utilities of ReP2A and GA producers by 5.103% and 10.14%, respectively, improving profit stability under renewable uncertainty. Sensitivity analysis further confirms the effectiveness of the mechanism under different levels of renewable variability and capacity configurations.