Cooperative game of electricity retailers in China's spot electricity market

Abstract Chinese electricity market has undergone twice reforms since 2002. However, the current electricity market is still partially irrational in electricity pricing mechanism. Furthermore, the utilization of renewable energy is inefficient in western regions. From the perspective of market participants, electricity retailers are new entrants in deregulated electricity market. In this spot electricity market, they are faced with various challenges and opportunities. Thus, this paper introduces an inter-regional power transaction model based on bottom-up modeling. There are mainly three parts in this paper: ⑴ It examines the existing problems and achievements in the twice reforms, and introduces the participants of cooperative game in a spot market. ⑵It proposes an inter-regional electricity transaction model to illustrate the new pricing mechanism. ⑶ Based on cooperative game theory, it quantifies how costs, electricity prices and benefits affect the behavior of retailers in a spot market with some reasonable economic assumptions. What is novel about this research is that the proposed transaction model analyzes electricity retailers' behaviors in a spot market. The cooperative game model improves electricity retailer's competitiveness in a spot market, and is of great theoretical and practical significance for the reform and development of China's electricity market.