Strategic Reserve Mechanism Design under the Power Market Environment

The scale-up of wind and solar energy poses new challenges for the security of electricity supply and power system planning. Thus, various capacity remuneration mechanisms are introduced in electricity markets internationally. Coal power generation is indispensable to China’s power system, mitigating the volatility and randomness of renewable energy and promoting security and stability. This paper conducts an in-depth study on the strategic reserve mechanism for old and decommissioned coal-fired units to ensure the adequacy of power generation capacity. The principles, characteristics, and applicability of the strategic reserve mechanism are analyzed according to China’s national conditions. Meanwhile, a strategic reserve trigger mechanism based on the day-ahead spot market is designed to deal with the shortage of power supply during special periods and ease high electricity prices. The case studies show the effectiveness of the presented modeling framework and the advantages of the strategic reserve mechanism.