Theoretical And Empirical Study On The Bidding Mechanism Of Regional Electricity Market

The traditional SMP and PAB bidding mechanism present serious phenomenon of making false report of high price owing to information asymmetry in the implementation process.Its final results will affect the stability of the power system.Guiding rational power companies disclose their real costs will be beneficial to optimal allocation of power resources.At the same time,it will reduce the possibility of market manipulation caused by market power and the risk of fluctuations in market prices.Therefore, designing a new bidding mechanism with incentive compatibility has important significance.This paper designed a new incentive bidding mechanism that makes generation companies quote price according to their real marginal costs based on mechanism designing theory.Under the new bidding mechanism,power grid company offer generation companies a part of information rents to encourage them quote price according to real costs.Every generation company obtain the largest profits when it presents real cost,then it will disclose its own real costs.In other words,presenting its real cost is the most superior strategy.