An efficiency oriented model of electricity market in transition period

• Propose a new model of electricity market to improve the efficiency.
• Analyze the situations of market liberalization in developing countries, typically in China.
• Introduce coordinated financial tool as a concept to deal with the market affairs or conflicts.
• Guide the generators to be more efficient through different market rewards.
• Give advises to the selections of the variables according to their roles in the model.

Generation efficiency is a key factor to save energy and reduce emissions. Many countries have resorted to the market liberalization for higher efficiency. The reformers usually expect the price could guide the efficiency through the competition between the generators. But the market will not get matured enough in a short time, especially in developing countries. In this efficiency oriented model, the security constraint economic dispatch (SCED) is adopted to achieve the physical efficiency, and virtual generation right (VGR) is proposed as the coordinated financial tool to adjust the performance of the generators to be aligned with the efficiency. The simulation demonstrates a typical case with modified 39-bus New England system. The result confirms the feasibility of the model.

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