With the rapid expansion of renewable energy and the acceleration of electricity market reforms, coal-fired units are facing increasing difficulty in recovering fixed costs due to marginal cost-based bidding competition and depressed clearing prices caused by low-cost renewable integration, circumstances in which reasonable returns and investment incentives for coal-fired power plants are not guaranteed. To address this issue, this paper proposes a capacity cost compensation mechanism for coal-fired power in the electricity market environment. First, a joint clearing model for the electricity spot market considering both energy and reserve services is established, and annual market operation simulations are conducted to obtain unit output schedules, clearing prices, and annual revenues. Second, based on the long-term simulation results, the marginal clearing probability and fixed cost recovery deficit of each coal-fired unit are calculated, and a capacity compensation pricing method based on marginal clearing probability weighting is proposed to determine the system unit capacity compensation price. Subsequently, the compensated capacity is determined using the availability factor method, comprehensively reflecting each unit’s actual contribution to system capacity adequacy. Finally, case studies conducted on a modified IEEE 30-bus system validate the effectiveness of the proposed mechanism. The results demonstrate that following the implementation of the proposed mechanism, the investment payback periods of all coal-fired units are reduced to within the planned 20-year horizon, thereby ensuring the sustainable operation of coal-fired units and maintaining adequate reliability margins in the power system.
Cheng et al. (Sat,) studied this question.