Abstract:

Speeding up the construction of the electricity market is of great significance to the realization of the “dual carbon” goal. The Unified Settlement Point （USP） mechanism on the user side is considered an effective measure to smoothly promote electricity marketisation and is being piloted in a number of provinces in China（e.g. Guangdong， Zhejiang， etc.）. Financial Transmission Rights （FTRs） are important electricity price risk aversion tools in the electricity market. Therefore， a comprehensive theoretical analysis of the impact of the new electricity price mechanism is required. However， up to now， there has been a lack of in-depth research on issues relating to the practical operation of the new electricity price mechanism， such as its impact on generators' bids and on the hedging effect of FTRs. In view of this， the impact of the introduction of FTRs on generators' bidding behavior under the user-side USP price mechanism is analyzed， and a model for generators’ bids is constructed， taking into account FTRs， forward contracts and the spot market. The model also takes into account power system security constraints and demand response factors to make the model more realistic. The basic conclusion of this paper is that the USP price mechanism affects the bids of power generators through two ways： profit and risk， and the introduction of FTRs can help power generators avoid the risk of price difference. The simulation results show that under the scenario that the bid factor of the other generator set in this paper is 1.2， the bid factor of the own generator in the forward market is 2 and the bid factor in the spot market is 1.55， the optimal FTRs market strategy is to purchase， with a purchase quantity of 448.70MW. Under the scenario of uncertainty about other generator’s bid factor， 500 simulations show that the optimal bid factor in the spot market ranges from 1 to 1.75， the optimal bid factor in the contract market ranges from 1.45 to 2. The purchase of FTRs increases generators' profits by approximately 1%， indicating that FTRs effectively assist generators in reducing losses under the user-side USP price mechanism. Based on the results， policy recommendations are put forward such as the introduction of transmission rights， the disclosure of historical bid information， the strengthening of grid construction of congestion lines， and the increase of the proportion of power generation companies participating in the market. The bidding model developed in this paper can provide a theoretical basis for electricity market analysis and forecasting， as well as for the choice of bidding strategies by power generators.

Key words: bidding model, electricity price mechanism, financial transmission rights, electricity market, market efficiency