Impacts and Countermeasures of Generators' Strategic Bidding on Inter-Provincial and Intra-Provincial Spot Markets

doi:10.11930/j.issn.1004-9649.202503108

Abstract

Abstract:

Electricity spot-market price serve as a crucial signal that reflects supply-demand dynamics and guides optimal allocation of resources. However, when market resources become scarce, some generators may exploit their market power to secure higher profits, resulting in distorted market price signals and excessive costs for end users. Establishing a robust mechanism for monitoring and constraining market power, and fostering vigorous competition among market participants, is therefore essential. Accordingly, based on the operational realities of the two-tier electricity market in China, a competitive equilibrium model is first established to represent generators' participation in the two-level spot markets. Next, based on the correlation of generators' strategic behaviors during resource scarcity, their strategic bidding practices are scanned, the scope of their bidding strategies is analyzed, the impacts of market-power abuse are quantified, and a simulation analysis is conducted on the problems existing in the current market mechanism under extreme supply-security scenarios. Finally, based on the case study results, the mechanisms of generators' strategic behavior is analyzed, and recommendations are proposed to improve the two-tier spot market trading mechanism from three aspects: optimizing the market bidding mechanism, enhancing the market supervision and penalty system, and establishing a bilateral bidding-guided market competition equilibrium.

Key words: electricity spot market, inter-provincial market trading, strategic bidding, price signal, incentive compatibility

SHANG Jingyi, ZHANG Yihan, YANG Fuwang, XIANG Mingxu. Impacts and Countermeasures of Generators' Strategic Bidding on Inter-Provincial and Intra-Provincial Spot Markets[J]. Electric Power, 2025, 58(11): 1-13.

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URL: https://www.electricpower.com.cn/EN/10.11930/j.issn.1004-9649.202503108

https://www.electricpower.com.cn/EN/Y2025/V58/I11/1

Figures/Tables 11

Fig.1 EPEC model of electricity market considering I generator under strategic bidding

Table 1 Parameter setting

项目	省份
项目	A	B	C	D
真实成本范围/ (元·(kW·h)^–1)	0.222~ 0.373	0.210~ 0.417	0.233~ 0.364	0.242~ 0.388
总装机容量/MW	23450	23450	16750	15075

Fig.2 Total revenue of generators in province A under different bidding strategies

Fig.3 Electricity purchase costs in province C under different bidding strategies by generators in province A

Fig.4 Total revenue of generators in province E under different bidding strategies

Fig.5 Inter-provincial market clearing prices under different bidding strategies of generators

Fig.6 Market clearing prices under different bidding strategies of generators in province E

Fig.7 Revenues of generators in province E under different bidding strategies in extreme scenarios

Table 2 Comparison of revenues of generators in electricity-selling provinces under different bidding strategies

省份	市场	收益/万元		增长幅度/%
省份	市场	真实报价	最优策略	增长幅度/%
E	省内	683.05	2121.97	310.66
	省间	227.70	1762.31	773.96
	省内+省间	910.75	3884.28	426.79
F	省内	1404.17	1404.17	0
	省间	62.50	5832.17	933.14
	省内+省间	1466.67	7236.34	493.39

Table 3 Comparison of inter-provincial payments in electricity-purchasing provinces under different bidding strategies

省份	省间购电费用/万元		增长幅度/%
省份	真实报价	最优策略	增长幅度/%
G	251.00	2256.52	899.01
H	329.00	2957.74	899.01
I	407.00	3658.96	898.95

Fig.8 Schematic diagram of the one-time bidding model

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