A Study On The Bidding Of Power Generation Company In Retail Competition

The worldwide introduction of competition to break monopoly in the electric power industry aims at building competitive electricity markets and achieving efficient utilization of social resources. The mode of retail competition is the direction of reform, and a competitive retail market is the goal of reform. Now the reforms of electric power industry in several foreign countries have been in the stage of retail competition. In our country, the 5th document about the reform of electric power industry issued by the State Department suggested the separation of distribution from transmission network in "the tenth five-year plan " period. So it's important in theory and practice to study the bidding of power generation companies in the mode of retail competition.In electricity market, power generation companies can maximize profits through strategic bidding, while it is also necessary for regulators to investigate such strategic bidding behavior so as to identify possible market power abuse and to limit such abuse by introducing appropriate market regulation rules. This paper is established in the regulation of electricity market. The paper studies on the bidding strategic of power generation companies in retail competitive market.Without considering the affections of vesting contract market, this paper analyzes the bidding strategy of power generation companies in spot market using the microeconomics theory, and also some special bidding strategies when the demand of electric power is very high.Considering the vesting contract, this paper establish an equilibrium model of electricity market including the vesting contract market and the spot market using supply function equilibrium theory. In the end, it studies how the bidding strategies of power generation companies are affected by some factors such as demand elasticity and the number of companies though some numerical example. Theoretical analysis and numerical results show that electricity forward transactions play a significant role in reducing the incentives of power generation companies to exercise market power to manipulate the market, and help to achieving a more efficient market equilibrium price.