Capacity Market Mechanism Design, Considering Network Optimization and Energy Transition

The coordination of enrgy transition, fixed cost recovery, and sufficient generation supply leads to a new challenge for a traditional capacity market mechanism. Moreover, in order to better match network expansion at the same time, it is crucial to redesign the capacity market mechanism considering system topology. In this paper, a novel capacity market mechanism is proposed considering spot market operations, network expansion, and energy transition, which can minimize the total cost of capacity investment, network expansion, and generation operations, while satisfying the energy transition constraints and topology circumstances. Specifically, the capacity market mechanism co-ordinated with spot market operations is illustrated, in which the energy transition and network constraints are embedded. Then, a bi-level optimization model is established where the trade organizers minimize the total cost of both investment and operations, subject to the spot power market simultaneously minimizing the local dispatching costs. The numerical results of a test system show that more economical capacity portfolios can be obtained by constructing reasonable transmission lines, thereby obtaining a more optimal market cost. A detailed multi-scenario simulation is further analyzed to verify the effectiveness of the proposed market mechanism.