High-cost generator units are at a cost disadvantage in electricity spot markets. This study focuses on revenue mechanisms of gas-fired units affected by power market reform in Guangdong province, China. For the first time, we compare impacts on market indicators of five settlement mechanisms: feed-in tariff (FiT), location marginal price (LMP), contract for difference (CFD), direct subsidy (DS), and estimated revenue method (ERM). In particular, we design key parameters, including authorized CFD and ERM of two kinds of government authorized contracts based on traditional dispatching patterns to avoid significant profit fluctuations brought by market reforms. We also analyze impact of factors such as climbing performance, seasonal load, and subsidy amount on the overall market and its players. Results of a case study show to directly subsidize gas-fired units will lead higher-cost units to generate more electricity, with a resulting loss of social welfare. Disruption of market prices and provision of unreasonable incentives are fatal disadvantages of this subsidy method. The government and policymakers should consider financial means to adjust benefits to reduce production costs and increase social welfare. Also, by case analysis, the ERM shows its stable performance in revenue of high-cost units, while we find that authorized CFD is not applicable for gas-fired units whose output is unstable as a marginal unit frequently. Therefore, we suggest government agencies adopt ERM to sign contracts with gas-fired units, to attain a balance between fairness and efficiency.

In this paper, a new operational mode is proposed for energy storage, in which an improved semi-centralized mechanism is proposed for energy storage to participate in the day-ahead energy market. The new operational mode, i.e., the flexible state-of-energy (SOE) mode, is proposed based on the previous fixed SOE mode, under which the final SOE of energy storage at the end of the last period of the scheduling horizon is not limited to a predefined value. Accordingly, the value of the SOE is introduced to quantify the deviation cost of the final SOE from the predefined value. Under the proposed market mechanism, energy storage submits to the system operator the unit charging and discharging costs and the value of the SOE. The system operator dispatches the charging and discharging power of energy storage according to the data submitted and system operations. A comparative analysis is conducted in the case studies, and results demonstrate that the proposed mechanism is efficient in further realizing the flexibility potential of energy storage and reducing the total cost of the power system.

Power producers’ profits are determined by the market price in the electricity market and therefore they will adopt certain strategies in market transactions to achieve higher profits. In an electricity spot market that adopts uniform pricing, power producers with considerable generation capacity are able to exercise their market power, given that the market concentration is relatively high at the beginning of market reform. It has been proved that an effective bidding strategy can increase the market clearing prices, so as to increase the profits of the power producer. Fortunately, the introduction of long-term transactions may mitigate the impact of producers’ market power, as a great amount of long-term volume is settled at the long-term contract price, which is determined in advance and is less fluctuating than the spot price. Two forms of long-term transactions, the fixed volume contract and the varied volume contract, are studied in this paper. Simulation studies are conducted on a multi-agent platform, where both the long-term and spot transactions of power producers are included, and the total profits of a power producer with or without long-term transactions are analyzed to demonstrate their influence. Meanwhile, the results clearly show that long-term transactions can effectively prevent power producers from exercising market power.