Model selection and mechanism design for electricity markets in hydropower‐rich regions: Adaptation study

Abstract

The development of foreign electricity markets has been relatively complete, while China's electricity market started late and the design of the market mechanism needs to be improved, so the selection of a suitable market model and the design of the market mechanism in hydropower‐rich regions is conducive to the healthy development of the electricity market. While most of the first eight pilot regions in China have entered the long‐period continuous operation stage, and all the second batch of six power spot pilots have started the simulation trial run. However, the construction of power markets in hydropower‐rich regions of China, Sichuan, and Yunnan, still faces multiple problems to be solved, such as ensuring the reliability of medium‐ and long‐term power supply, improving the efficiency of hydropower resources utilization and consumption scale, and maintaining the stability of market prices. In this paper, the authors establish a multi‐scale joint clearing model for different market models considering both long‐term and short‐term operation strategies, and conduct simulations of different market models at different time scales to compare and analyze the optimization results and electricity price fluctuations of different market models. It can stabilize the market price and reasonably reflect the true value of hydropower, and also promote the consumption of clean energy and guarantee the reliability of power supply in the medium and long terms. Finally, suggestions are made for the selection of electricity market models, the security of energy supply and the design of sustainable development mechanisms for hydropower in hydropower‐rich regions such as Yunnan and Sichuan in China, with a view to providing useful references for the construction of China's electricity market.

Design of a Stochastic Electricity Market Mechanism with a High Proportion of Renewable Energy

“…Step ii: Under the constraints of power system operating, the system operator arranges the pre-output of each unit with the minimum expected purchase cost according to Equa-tion (11). The pre-output of conventional unit i is P CO * i,t (B), and the pre-output of stochastic generator j is P RE * j,t (B).…”

“…Step iv: For conventional unit i, calculate the expected cost, ∼ C CO i (B), by Equation ( 12), the objective function value of Equation (11), where conventional unit i does not participate in the market, and the VCG payment of the unit by Equation (13).…”

“…The design of the market mechanism needs to emphasize the synergy of new energy, traditional energy, and flexible resources to coordinate the technical characteristics and economic endowments of flexible resources, such as traditional coalfired power generation, hydroelectric power generation, and new energy power generation. The government, industry, and academia are all aware of the inadaptability of the current market mechanism, and the exploration and research of the market mechanism has become one of the hot spots in the research of the power industry in the context of the new power system [6][7][8][9][10][11]. Zhu Yonggang et al proposed a decentralized decision-making competition mechanism applied to the generation-side electricity market based on the theory of economic mechanism design, in order to reduce the strategic behavior of power generation enterprises and coordinate individual interests with overall interests [6].…”