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Competitive Mechanism Design in Electricity Market Based on Fair Benefit Allocation

1. Department of Electrical Engineering, Tsinghua University, Beijing 100084, China;2. State Key Lab of Control and Simulation of Power System and Generation Equipments(Tsinghua University), Beijing 100084, China;3. Beijing Tsintergy Technology Co. Ltd., Beijing 100084, China;4. Economic Research Institute of State Grid Henan Electric Power Company, Zhengzhou 450000, China

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    Promoting the electricity price reform, and constructing a “fair, open, organized, competitive and complete” electricity market are critical tasks confronted by the new-round electric power system reform of China. At present, the foreign electricity markets generally adopt locational marginal prices(LMPs)for electricity market clearing. However, the existing theory and practice demonstrate that LMPs cannot incentivize market participants to be truth-telling, and cannot solve the problem of information asymmetry. To incentivize market participants to truthfully bid and thereby achieve an optimal allocation for electrical resources, a competitive mechanism in electricity markets is proposed based on fair benefit allocation. Firstly, the phenomenon and reason why the LMP mechanism cannot elicit truthful information while leading to market efficiency loss are analyzed. Then based on Vickrey-Clarke-Groves(VCG)theory, a fair benefit allocation mechanism is proposed for day-ahead electricity markets, and it is proved that the proposed mechanism satisfies the properties of incentive compatibility, individual rationality and system cost minimization. The economic meaning why the proposed mechanism satisfies incentive compatibility is also explained. Case studies based on IEEE 30-bus and 118-bus systems validate the effectiveness of the proposed mechanism.

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WANG Jianxiao, ZHONG Haiwang, XIA Qing,et al.Competitive Mechanism Design in Electricity Market Based on Fair Benefit Allocation[J].Automation of Electric Power Systems,2019,43(2):7-17.DOI:10.7500/AEPS20180410009

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  • Received:April 10,2018
  • Revised:November 23,2018
  • Adopted:September 25,2018
  • Online: November 19,2018
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