Abstract: The electricity spot market reform in China has led to a significant change in revenues for different power generation entities. Aiming at this problem, this paper proposes a practical market transition scheme. Firstly, the paper introduces the basic situation of long-term electricity transaction market and spot market in China, and analyzes the possible problems after the operation of spot market. And then, from the perspective of equity property rights and welfare distribution, a transition scheme for electricity market reform is proposed to solve the existing problems through allocating financial transmission rights (FTRs). In the proposed scheme, based on the FTRs before and after spot market reform, a new FTR mechanism is proposed according to the basic theory of FTR, which is to allocate a part of FTRs to the power generation enterprises. A case study of an IEEE-14 bus system was carried out to verify the effectiveness of the proposed scheme, which shows that the proposed mechanism can reduce the revenue changes between different power generation enterprises without affecting the market efficiency, and is conducive to the smooth transition of the electricity market.

Key words: financial transmission right, spot market, equity property rights, welfare distribution