Analysis reveals increasing spot trading may enhance efficiency in power markets, suggesting reforms to support renewable integration.
Against the backdrop of the full market integration of renewable energy, determining a reasonable proportion between medium- and long-term (MLT) contracts and spot trading has become a core issue in power market reform. Current Chinese policy requires that the share of MLT contracts should not be less than 90%, which helps ensure system security but may suppress the price discovery function of the spot market and limit renewable energy integration. This paper constructs a three-layer model: the first layer describes spot market clearing through Direct Current Optimal Power Flow (DC-OPF), yielding system energy prices and nodal prices; the second layer models bilateral contract decisions between generators and users based on Nash bargaining, incorporating risk preferences via a mean–variance framework; and the third layer introduces two evaluation indicators—contract penetration rate and economic proportion—and applies outer-layer optimization to search for the optimal contract ratio. Parameters are calibrated using coal prices, wind speed, solar irradiance, and load data, with numerical solutions obtained through Monte Carlo simulation and convex optimization. Results show that increasing the share of spot trading enhances overall system efficiency, primarily because renewable energy has low marginal costs and high supply potential, thereby reducing average market prices and mitigating volatility. Simulations indicate that the optimal contract coverage rate may exceed the current policy lower bound, which would expand spot market space and promote renewable energy integration. Sensitivity analysis further reveals that fuel price fluctuations, renewable output, load structure, and risk preferences all affect the optimal proportion, though the overall conclusions remain robust. Policy implications suggest moderately relaxing the constraints on MLT contract proportions, improving contract design, and combining this with transmission expansion and demand response, in order to establish a more efficient and flexible market structure.
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Wu et al. (2025) studied this question.
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