The coordination mechanism of forward market and spot market under the cost-based electricity market model for Yunnan

Abstract

Establishing a electricity market system that effectively coordinates the forward market and the spot market is an important task for China's new round of power sector reform. Yunnan has established a forward electricity market. The next step in Yunnan is to set up a spot market. Yunnan electricity market is a hydro-dominated market, similar to South American countries represented by Chile, which is suitable for the cost-based electricity market model. In this paper, we introduce the current situation of Yunnan electricity market at first, including the power structure, monthly transaction volume, monthly transaction price, transaction modes and so on. Then we introduce Chile electricity market which adopts the cost-based electricity market model, including the spot market and forward market of Chile. After that, based on the current situation of Yunnan electricity market and the experience of Chile electricity market, a coordination mechanism between the forward market and the spot market is proposed for Yunnan electricity market, which is similar but different from Chile electricity market, because large consumers and retailers of Yunnan electricity market has been participating in the forward market for many years. Finally, a example is given to show the settlement process under the designed market mechanism.