Research on incentive bidding mechanism to coordinate the electric power and emission–reduction of the generator

Designing an electricity price mechanism that can reduce the power generators’ market power as well as pollution emissions has been the key to deepening the reform of the electricity market. Based on the theory of signal transduction, this paper analyzes the main electricity pricing mechanism in the present electricity market and holds that the interference signal is the important factor in evaluating electricity pricing mechanism. As a result of the study, an incentive electricity pricing mechanism was proposed based on the signal transduction to coordinate the electric power and pollution emission. Two measures are adopted in the model. First, semi-random matching between the generator and the power purchaser, which can interfere with the tacit collusion signals among generators, is carried out in the electricity market. Subsequently, the electricity products are divided into two categories according to the emissions per MW h and different electric power markets are set respectively. The government adopts the corresponding incentive strategy to encourage the generators to reduce pollution emissions in the different electric power markets. The mechanism interfere the tacit collusion signal among generators by semi-randomly matching and distinguishing the difference of electric power products. Therefore, the generator can be persuaded to reduce the market power and pollution emissions.