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Energies 2016, 9(6), 463; doi:10.3390/en9060463

Market Equilibrium and Impact of Market Mechanism Parameters on the Electricity Price in Yunnan’s Electricity Market

1
Institute of Hydropower System & Hydroinformatics, Dalian University of Technology, Dalian 116024, China
2
Yunnan Power Exchange, Kunming 650000, China
*
Author to whom correspondence should be addressed.
Academic Editor: Javier Contreras
Received: 28 March 2016 / Revised: 10 June 2016 / Accepted: 10 June 2016 / Published: 17 June 2016
(This article belongs to the Special Issue Forecasting Models of Electricity Prices)
View Full-Text   |   Download PDF [4124 KB, uploaded 17 June 2016]   |  

Abstract

In this paper, a two-dimensional Cournot model is proposed to study generation companies’ (GENCO’s) strategic quantity-setting behaviors in the newly established Yunnan’s electricity market. A hybrid pricing mechanism is introduced to Yunnan’s electricity market with the aim to stimulate electricity demand. Market equilibrium is obtained by iteratively solving each GENCO’s profit maximization problem and finding their optimal bidding outputs. As the market mechanism is a key element of the electricity market, impacts of different market mechanism parameters on electricity price and power generation in market equilibrium state should be fully assessed. Therefore, based on the proposed model, we precisely explore the impacts on market equilibrium of varying parameters such as the number of GENCOs, the quantity of ex-ante obligatory-use electricity contracts (EOECs) and the elasticity of demand. Numerical analysis results of Yunnan’s electricity market show that these parameters have notable but different effects on electricity price. A larger number of GENCOs or less EOEC contracted with GENCOs will have positive effects on reducing the price. With the increase of demand elasticity, the price falls first and then rises. Comparison of different mechanisms and relationship between different parameters are also analyzed. These results should be of practical interest to market participants or market designers in Yunnan’s or other similar markets. View Full-Text
Keywords: market equilibrium; electricity price; Cournot model; market mechanism parameter market equilibrium; electricity price; Cournot model; market mechanism parameter
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Cheng, C.; Chen, F.; Li, G.; Tu, Q. Market Equilibrium and Impact of Market Mechanism Parameters on the Electricity Price in Yunnan’s Electricity Market. Energies 2016, 9, 463.

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