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The growing penetration of variable renewable energy has brought all-round challenges to the current power system, no matter for the grid infrastructure, market design or the power producers. The positive and negative externalities caused by the market participators are to be finer priced and a significant amount of flexibility is to be added to the system, in order to counter these problems and facilitate energy transition. The flexibility providers range from dispatchable sources such as thermal generators and gas turbines, interruptible data centers and electric vehicle clusters, to direct and indirect storage such as battery and hydrogen. The intermittency of variable renewable energies can be effectively managed combining with these flexibility providers, and the more expectable output can lead to the more expectable income. 

This study investigated a wind-biogas-hydrogen hybrid system, and biogas plays the role of ramping the system up and down according to different situations. When there is a wind deficit, the biogas-to-power unit is activated to compensate for the gap; when there is a wind surplus, the extra power is fed to the biogas pyrolysis equipment and produces hydrogen. To figure out its performance in the power market, a Supply Function Equilibrium approach for the day-ahead market is adopted and extended to the active participation in the balancing market under a two-price settlement scheme. Selling the hydrogen, meanwhile, earns the system additional revenue from the hydrogen market. Given these settings, twelve scenarios of operation mode are proposed and their marginal costs are derived. Results show that the supply function of the system follows the price signal in the balancing market and as well is determined by the cost of activating the flexibility components. By aggregating the Karush-Kuhn-Tucker (KKT) conditions from all the scenarios, the bidding price that maximizes the system profit can thus be obtained.