Analysis Of Market Power In Electricity Market Based On Linear Supply Function Model

The practical electricity m arket is closely akin to oligopoly because of characteristics of power industry. Therefore,generation companies(Gencos) have the motivation to carry ou t its m arket power in ord er to ga in reasonless excess-benefit. After analyzing condition of mark et operating and Gencos'behavior ,regulayory authority designs applicable regulation system and m easurement to restrain m arket power for m arket efficient competition. Based on the linear supply function (LSF) model,this paper focuses on analysis of issues of market power in electricity markets, especially about evaluating and restraining of it.Firstly, the def initions of market power in electricity market are presented. The origin, influencing factor , realizing pathways and m easurements to re strain market power are also introduced.Then,this paper divides the existing evaluating indices into long term evaluating indices and critical evaluating indices. Combining with a power m arket of IEEE 30-bus test system,this paper contrastively analyzes the theoretical features and the superiority and inferiority in application of diverse indices ,and the result indicates that Lerner index(LI) is able to reflect the magnitude of market power objectively. An improved LI is put forward, based on LI,comprehensively considering the change of load, the practical power supply and concentrating degree of the market, in purpose of reflecting the m arket condition m ore comprehensively. The evaluating ef fect of this index is also validated through practical examples.Finally, this paper analyzes the change of market power after vertical integration between a Genco and the only grid com pany by improved Lerner index . LSF model is used to s imulate Gencos'strategic behavior in wholesale electricity m arket. The impact of concentrating degree of the market, cost and profit margin of grid company and level of demand on market power are also discussed. Through the sim ulation of the IEEE 30-bus test system ,the result ind icates that ver tical integration weakens market power in a certain extent.