Mechanism Design Of Electricity Market For Market Power Mitigation And The Study On Decision-making Methods

The medium-and long-term transactions and spot market are the crucial parts of the electricity market system.The objective of the new-round revolution is to hedge the risk by the medium-and long-term transactions and to discover the true price signal by the spot market.The right price signal is the key for optimizing the resources of electricity market,also the symbol of system efficiency.In the electricity market,the cost of generation company(GENCO)is private information,which will be buried by the market power abuse and then leads to the wrong price and system inefficiency.In China,the market concentration is extremely high in the offering side,which can't be decomposed in a short run.The potential risks of market power abuse are very high.To achieve the revolution goal by mitigating the market power,this paper designs the connection mechanism between the medium-and short-term market and the trading mechanism of the day-ahead market.Then the analytical method for the price signal is proposed.Based on the analysis of the price signal,the decision-making methods for hydro producers are studied.The logics of the contents are from the top-level mechanism design to the lower-level decision-making,which can provide references for the market regular and support the market participants for decision-making.The details are as follows:(1)The mechanism design for connecting the medium-and short-term markets considering the market power mitigation.The connection mechanism is the coupled relationship by decomposing the contract energy into the spot market for settlement.The existing decomposition strategies focus on fairness but ignore the market power mitigation.To address this issue,the evaluation model of the decomposed contract for mitigating the market power is established.Further,the decomposition strategy-based connection mechanism for mitigating the market power is designed.In the evaluation model,the decomposed contract is linked to the market equilibrium based on the optimal price response theory.Then the Lerner index is employed to quantize the effect of the market power mitigation of the contract.Based on the evaluation model,a decomposition strategy for contracts based on the optimal generation scheduling is proposed to connect the medium-and short-term market.Theoretical analysis for mitigating market power of different decomposition strategies are performed.Test results show that the proposed decomposition strategy that can improve the contract coverage exhibits better performances for market power mitigation.Based on the proposed decomposition strategy,the connection mechanism of the medium-and short-term markets can effectively hedge the risks from the spot market.(2)A universal mechanism for day-ahead market considering the market power mitigationIn the imperfect market competition,the current marginal price mechanism can not lead to the truthful bids of GENCOs,which causes the market power abuse.The integration of the information rent in the settlement rule can handle the information asymmetry caused by the market power abuse.However,the existing deriving methods for the information rent rely on the simplified hypothesis of GENCO's bids,limiting the applicability under the real market environment.To overcome this shortage,a universal mechanism design model for the spot market is formed based on mechanism design theory.In the design model,the maximum market efficiency is reached when the GENCOs tell the truth.Based on the design model,the settlement rule for the day-ahead market is deduced based on the Envelope theorem.Based on the settlement rule,the GENCOs' incomes in the day-ahead market consist of the information rent and the energy production costs.The information rent is an integral function of the GENCOs' bids,which is universal for any bidding forms.Under the designed mechanism,the market power mitigation is realized through the distribution of the economic profits and the current trading mode is not revised.The test results show that the designed mechanism can effectively mitigate the market power while can be implemented under the various bidding forms.The true price signal then can be discovered.(3)A derivation method for the price expressions based on the Envelope theorem and its applicationThe analysis of the price signal can facilitate the comprehension of the market mechanism and support the decision-making in the market environment.However,the effective analytical method for the price signal needs to be further studied.To cope with this issue,the derivation method for the price expression based on the Envelope theorem is proposed.Based on the single period clearing model of the day-ahead market,the economic significance of the Lagrange multiplier is defined by implementing the Envelope theorem.Then,the price expressions considering the impact of the market demand/GENCO's cleared energy are deduced based on the Envelope theorem.According to the price expression in terms of the market demand,the mathematical characteristics of the power demand curve(PDC)are analyzed,revealing the impact mechanism of the market demand on the price.According to the price expression in terms of the GENCO's cleared energy,the mathematical characteristics of the residual demand curve(RDC)are analyzed,revealing the impact mechanism of the GENCO's cleared energy on the price.Finally,by simulating the PDCs and RDCs based on the IEEE 14-,IEEE 30-,and IEEE 118-bus systems,the theoretical conclusions are verified.(4)A hydro scheduling method in the day-ahead market considering the social benefitsDuring the transition period of the electricity market reform,the scheduled energy and market energy are coexisted.When the hydro energy is set as the scheduled,the scheduling method only considers the hydro producer's benefits but omits the social benefits under the day-ahead market environment.Besides,the modeling precision and solving efficiency of the hydro scheduling problem can be further improved.For this case,the paper first builds the hydro scheduling model in the day-ahead market,aiming to maximize the social benefits.In the model objective,the power purchase fees in the day-ahead market and the economic benefits of the hydro scheduling.Based on the relationship between the price and market demand denoted by the PDC,the power purchase fees are calculated.The benefits of the hydro scheduling are determined by the contract income and the scheduling cost calculated by the economic dispatch model considering the loss of crossing the vibration zones.The constraints of the model include the contract restriction,available inflows,and water level limitations.Two optional solution algorithms are proposed to improve the calculation efficiency.The first algorithm is termed as the multi-group parallel evolution algorithm.The second one is the mixed integer programming based on the piecewise linear technique and the big M method.The test results indicate that the proposed scheduling method can effectively improve the social benefits in the day-ahead market.The proposed heuristic algorithm performs better in global convergence with high efficiency.The mixed integer programming can converge rapidly.(5)A day-ahead optimal offering method for the hydro producer considering the loss of crossing the vibration zones and the scenario reductionThe existing researches model the stochastic characters of the rivals' strategies and the load demand with RDC scenarios.The massive scenarios increase the computation burden.Besides,the disregard of the loss of crossing the vibrations reduces the economic benefits of the hydro offers.To remedy the problems,a day-ahead optimal offering method for the hydro producer considering the loss of crossing the vibration zones and the scenario reduction is proposed.First,the RDC scenarios that hydro producer is faced with when devising the offering curves are constructed based on RDC's mathematic characters and its economic significances.In terms of the massive RDC scenarios,a fast forward selection method based on the modified Wasserstein probability distance is proposed to reduce the scenarios.Based on the reduced scenarios,the benefit-maximized optimal offering model for the hydro producer is established.In the model,the offering income is calculated according the relationship between the GENCO's cleared energy and price denoted by the RDC scenario.The generation costs are calculated by the hydro economic dispatch model considering the loss of crossing the vibration zones.The inflows,water level restrictions,and operational conditions of the hydro units are all included in the model.Finally,the established model is converted into mixed integer programming by the piecewise linear technique and the big M method.Then the CPLEX is employed to solve the model.Test results demonstrate that the proposed method can support the hydro producer to efficiently devise the offering strategy while the devised offering strategy can increase the economic benefits.