The Design Of Provincial Electricity Market In China

Electricity industry is a basic profession that has the characteristic of public utility and natural monopoly. Base on the characteristic of electricity industry, electricity industry in many countries of the world was regulated strictly by government and integrated into vertical monopoly pattern in the initial stage of electricity industry development. But the regulation also takes some disadvantages such as electricity power shortage, low level of service, few option of consumer, and lack of efficiency. With the development of electricity science and technology, it becomes possible to separate electricity industry into four independent segments named as generation, transmission, arrangement and sale. Not all the segments of electricity industry have the characteristic of natural monopoly. It is possible to relax regulation and establish contest mechanism in some segments.Since the 1980s, many countries and areas have practiced electricity markets reform early or late, explored the ways of configuring electric power resources with electricity markets. The essential of electricity market reform is to break monopoly, establish market system, improve efficiency and enhance social welfare. Electricity industry was vertically integrated into monopoly pattern in China in a long period. China also began to practice electricity market reform from 1998.It has been recognized a general trend to regroup the structure of electricity industry, to relax the regulation and to encourage competition. The form of electricity market usually varies from country to country because of the different factors of electricity industry. It is doubtless that the practices of foreign electric power market renovation have reference value to the renovation of China electric power market, but must take the situation of China into consideration. There are many differences between China and other countries, such as the structure of market and power grid, pattern of dispatching and environment of market. Therefore, it is very important and significant to investigate models of the electricity market in China, which are related to our national energy strategies and policies, economic developments and national grid conditions. The practice of electric power dispatching and administration in China decides that the electricity market system can be divided into three levels:provincial electricity market, regional electricity market and national electricity market. Since provincial electricity market plays an important role in the electricity market system of China, this dissertation focus on it. Based on the economical theories and electricity market theories, the provincial electricity market was designed with the consideration of power industrial and commercial characteristics.The purpose of the dissertation is to research model of the provincial electricity market in China. Since generation market plays an important role in the electricity market system of China, this dissertation focus on it. This dissertation, founded on the research results of natural monopoly theory, regulation theory, mechanism design theory, and industrial organization theory, has analyzed the characteristics and the development of electricity industry and revealed the reason that lead electricity industry from monopoly to competition. Through comparative analysis of foreign power markets, the paper discussed in a systematic way the construction of provincial electricity market at the aspects of its environment conditions, targets, developing stages, frame structure and operating methods, which combined work of successful experiences of electric power market construction abroad and the realistic consideration of electric power industry operation at home. Taking Hubei Province as an example, the paper presented a new market designation of great advantages and effectiveness, which based on an in-depth analysis of the main characteristics of Hubei electricity industry, and helped to reduce energy consumption. The integrated designing project of electricity market of the Hubei Province is the important production of this dissertation.The empirical analysis and standardize analysis play the same important role in this dissertation. Standardize analysis was used to establish the theory of electricity market and empirical analysis was used to design the Hubei provincial electricity market.The following is the main contributions of the dissertation.Firstly, on the principle of compatible-incentive, the paper presented a new contract-model based on generation-competitive environment with only one buyer in the market. Through adjusting competitive and uncompetitive amount of electricity, the contract-model can reduce the risk and cost of electricity purchasing, which will produce remarkable economic benefit.Secondly, the paper designed a method of transmission cost allocation based on "the demand and supply of power matching with social welfare" and "power-distance".Thirdly, the policy of "energy saving and emission reduction" was taken into account in the design of provincial electricity market.Fourthly, based on the game theory and the paradigm of "market structure-market action-market efficiency", the paper established a pattern for analyzing market action in electricity market.