How to deal with deviation electricity? Comparison of different deviation electricity handling mechanisms in the medium and long-term electricity market

In order to adapt to different base electricity revenue distribution needs, three base deviation electricity settlement processing methods are proposed, namely, expected revenue compensation method, deviation electricity substitution matching method, and average price difference compensation method. The expected revenue compensation method compensates the over-generation according to its generation cost and the under-generation according to its expected revenue, so that the actual power generation revenue of the unit is basically not affected by the base deviation electricity; the deviation electricity substitution matching method adopts the post-transaction power generation right transaction method to encourage low-cost over-generation to replace under-generation, and both parties to the transaction can obtain revenue; the average price difference compensation method reserves part of the revenue to compensate for the unsuccessful over-generation on the basis of electricity substitution, taking into account both individual initiative and overall balance.

introduction

In 2015, a new round of electricity market reform was fully launched, and China's electricity supply gradually shifted from the traditional planning model to the modern trading model[1]. In December 2016, the "Basic Rules for Medium- and Long-Term Electricity Transactions (Interim)"[2] was issued, which put forward guiding rules for the organization, execution and settlement of medium- and long-term transactions.

At present, the coexistence of base electricity and market electricity in China will not change in the short term. In production practice, the market electricity execution deviation is generally buffered by adjusting the base electricity to ensure the rigid execution of the market electricity contract. With the gradual liberalization of China's power generation and consumption plan [3], the scale of market transactions is expanding. It will be very difficult to achieve guaranteed execution and deviation adjustment of market electricity by adjusting the base electricity. At the same time, the base electricity itself will also generate deviation electricity during the execution process. At this time, it is necessary to use financial settlement and other methods to settle and evaluate the deviation electricity [4-5]. The deviation electricity settlement processing mechanism is a transitional solution in the early stage of the power market. In China, in-depth research has been conducted on this. Reference [6] corrects the approved line loss rate based on the actual grid and ground electricity of each party, and then uses the corrected line loss rate to decompose and settle the deviation electricity, solving the problem of negative line loss rate in cross-provincial power transaction settlement. Reference [7] determines the settlement price of each party by determining the responsibility for the deviation electricity of the cross-regional AC power grid, realizing differentiated pricing and separate settlement of the cross-regional power grid transaction contract electricity and deviation electricity. Reference [8] proposed a trading electricity volume deviation settlement compensation mechanism to promote the consumption of new energy. The deviation electricity volume is settled by using a unified electricity price, thereby achieving fair distribution of base electricity volume and monthly settlement of trading electricity fees. Reference [9] adopted the power generation rights trading model to alleviate the power volume contradiction between self-owned power plants and new energy enterprises, so that both parties can achieve a balance of interests under the existing market mechanism. Reference [10] suggested improving the inter-provincial power generation rights trading mechanism, guiding the power generation behavior of new energy and other power sources through the price mechanism, and balancing the interests of all parties. Foreign power markets also adopt similar trading settlement methods for the deviation electricity volume generated [11]. The UK allows market members to declare positive and negative deviation prices in the balancing market, and adopts a two-part price to settle the deviation electricity volume after the real-time operation ends [12]. The Texas market is gradually refined through the medium- and long-term, day-ahead, and real-time markets, and all electricity is cleared in the real-time market. The deviation electricity generated is settled according to the real-time node price [13].

With the steady progress of the construction of the domestic medium- and long-term electricity market, the proportion of market-oriented electricity has gradually increased, and the proportion of annual base electricity of power generation enterprises has gradually decreased. At the same time, the rigid execution of market electricity and the connection with the spot market must be ensured by adjusting the annual base electricity. The base electricity deviation caused by this has not yet had a suitable processing mechanism in most provincial power markets in China. In this context, this paper closely follows the actual needs of the project and proposes three settlement processing methods for base deviation electricity: the expected profit compensation method takes the power grid dispatching agency as the execution body to compensate for the power generation cost of over-generation and the expected profit of under-generation, which can minimize the impact of deviation electricity on the actual profit of the unit; the deviation electricity substitution matching method uses the post-transaction power generation right transaction method to encourage the unit to actively handle the deviation electricity, so as to obtain reasonable profits; the average price difference compensation method uses the average price difference as the upper limit to compensate the deviation units that have been traded, and the residual profit compensates the over-generation units that have not been traded, taking into account the initiative of the individual units and the overall balance of the system.

1. Current market deviation electricity processing method

At present, provinces that carry out medium- and long-term electricity trading in China will ensure the rigid execution of market electricity, while the base electricity has a certain degree of flexibility. Therefore, the base electricity is generally used as a buffer for market electricity, and the market electricity is settled according to the contract. The base electricity ensures the balanced execution progress of each power plant unit [14]. However, the different degrees of market openness and the different proportions of market electricity lead to different methods of handling deviation electricity in different provinces [2]. A province in North China, East China and South China has established a medium- and long-term electricity market system. The scale of market electricity in the three provinces has expanded successively, and the methods of handling market deviation electricity are different. The characteristics of the three provinces' handling of deviation electricity are shown in Table 1, and the specific handling methods are shown in Appendix A.

2. Method for settling electricity quantity with base deviation

2.1 Necessity of Settlement Method

After the execution of the unit's power generation plan for the month is completed, the trading center verifies the unit's executed electricity, deducts the rigidly executed market electricity, and obtains the unit's actual base electricity for the month. At the same time, the unit's planned base electricity formulated at the beginning of the month is adjusted according to the actual total base electricity of the month to obtain the unit's planned base electricity for the month, which is used as the basis for determining the base deviation electricity, and then the unit's base deviation electricity is obtained [4,7-8].

The existence of deviation electricity makes the base electricity execution unbalanced. If the deviation electricity is not handled properly, the interests of the under-generating units will be damaged, which is not conducive to the healthy execution of the base electricity. The deviation electricity should be settled and compensated by appropriate methods to eliminate the imbalance in the distribution of benefits caused by the deviation of the base electricity execution. Even if the base electricity has deviations during the execution process, it can be compensated and adjusted to a certain extent to ensure the balanced execution of the base electricity [15].

The base deviation electricity of the current month can be settled monthly or rolled over to the next month and settled at the end of the year. This paper takes the base deviation electricity processing of the current month as an example, and the proposed method is also applicable to the case of rolling base electricity and settling deviation electricity at the end of the year.

2.2 Main characteristics of settlement methods

On the monthly settlement day, based on various transaction data verified by the trading center, the actual base electricity consumption of the unit and the planned base electricity consumption to be settled are obtained. The difference between the two is the base electricity deviation of the unit[8].

Different processing methods and settlement rules for base deviation electricity will have a profound impact on the preparation of pre- and long-term power generation plans and the optimal dispatch of power generation resources during the process [16]. This paper designs three base deviation electricity processing methods, hoping to guide power optimization dispatch through settlement rules, safeguard the interests of all participants, and achieve the benign execution of base deviation electricity. The specific processing details of the three methods are as follows.