The existing electricity market mechanisms designed to promote the consumption of renewable energy generation complicate network participation in market transactions owing to an unfair market competition environment

where the low cost renewable energy generation is not reflected in the high bidding price of high cost conventional energy generation. This study addresses this issue by proposing a bi-level optimization based two-stage market clearing model that considers the bidding strategies of market players

and guarantees the accommodation of renewable energy generation. The first stage implements a dual-market clearing mechanism that includes a unified market for trading the power generations of both renewable energy and conventional energy units

and a subsidy market reserved exclusively for conventional generation units. A re-adjustment clearing mechanism is then proposed in the second stage to accommodate the power generation of remaining renewable energy units after first stage energy allocations. Each stage of the proposed model is further described as a bi-level market equilibrium problem and is solved using a co-evolutionary algorithm. Finally

numerical results involving an improved IEEE 39-bus system demonstrate that the proposed two-stage model meets the basic requirements of incentive compatibility and individual rationality. It can facilitate the rational allocation of resources

promote the economical operation of electric power grids

and enhance social welfare.