Peak and valley price is an economic measure which is used in the electricity industry to remove the peak load and to improve load rate and system stability. Peak and valley price can be used in both generation side and distribution side. It is necessary to study how to implement the peak and valley price in generation side especially when our power supply situation changed a lot and the power shortage appeared in summer and winter this year. This paper first researches the method to set power price, the theory foundation of the peak and valley price, and the implement in China; discusses the peak modulation methodologies of generation unit and the economic impact on each type of unit to do peak modulation. Then develops the peak and valley price in the generation side based on the linkage between the generation side and distribution side, including the peak and valley price difference design and the allocation of the peak and valley energy.
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