a Study of Reserve Aumann-Shapley Pricing Mechanism in a Competitive Electricity Market

Abstract

In the traditional vertically integrated electric utility, the generators always provide the reserve without any payment. In the electricity market, it is necessary to encourage the generators to provide the reserve through one scientific and reasonable reserve pricing mechanism. The Reserve AumannShapley Pricing Mechanism is put forward in this paper, with the analysis of the costs and benefits, the mutual costs and benefits of the energy and the reserve are allocated basing on the AumannShapley value firstly, and then the reserve prices under the competitive energy market are formed, the joint optimization model of the energy market considering the reserve AumannShapley price is founded, and the influence of the reserve Aumann-Shapley price on the generators' bidding strategies is analyzed. The Reserve Aumann-Shapley Pricing Mechanism is applicable to the actual model of the electricity market in China, at the same time, the study gives a new idea of the ancillary service pricing in a deregulated electricity market.

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