Design of Generation Capacity Cost Recovery Mechanism for the Early Stage Development of New Power System

The development of a new power system and electricity spot market has brought about significant changes in China's power system, affecting its planning, dispatching, and operation. However, the current single-electricity energy price system cannot adapt to the changing function and role positioning of the power system, causing difficulties in the normal production and operation of traditional generation sources. To address this challenge and ensure the long-term abundance of power generation capacity, a compatible electricity price system that includes a cost recovery mechanism for power generation capacity is urgently needed. This study proposes a power generation capacity payment mechanism that is adapted to the early stage of the development of the new power system, and analyzes the models, methods, and key elements of the mechanism. The analysis shows that the proposed mechanism can fully reflect the value of different capacity resources, provide reliable capacity for the system, facilitate the recovery of fixed costs, and play a positive role in ensuring the long-term abundance of power generation capacity. This contribution is crucial for the successful reform and development of China's power system.