IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v16y2023i6p2876-d1102672.html
   My bibliography  Save this article

A Comparative Analysis of Two Pricing Mechanisms, MCP and PAB, in the Chinese Frequency Regulation Market

Author

Listed:
  • Xian Huang

    (School of Control and Computer Engineering, North China Electric Power University, Beijing 102206, China)

  • Zhehan Li

    (School of Control and Computer Engineering, North China Electric Power University, Beijing 102206, China)

Abstract

In the face of the new reform of China’s “unified electricity market”, the frequency regulation ancillary service market in each region of China is still divided between using the MCP and PAB pricing mechanisms. The purpose of this paper is to explore the different impact the laws of the above two pricing mechanisms have on the frequency regulation market and to provide relevant suggestions for this electricity market reform. This paper simulates the competitive activities of the frequency regulation market based on the multi-agent simulation model, conducts a comparative experiment by changing the pricing mechanism to a single variable based on the rules of the Sichuan frequency regulation market in China, and concludes that MCP can make the market fast and stable, and that its market settlement price is low, which is suitable for the “unified electricity market”. Although PAB makes the market settlement price high, it can ensure the retention of high-performance units in the market, and the stable settlement price makes this model able to accurately reflect the “price signal”, making it suitable for late adoption in the “unified electricity market”.

Suggested Citation

  • Xian Huang & Zhehan Li, 2023. "A Comparative Analysis of Two Pricing Mechanisms, MCP and PAB, in the Chinese Frequency Regulation Market," Energies, MDPI, vol. 16(6), pages 1-23, March.
    • Handle: RePEc:gam:jeners:v:16:y:2023:i:6:p:2876-:d:1102672
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/16/6/2876/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/16/6/2876/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fabietti, Luca & Qureshi, Faran A. & Gorecki, Tomasz T. & Salzmann, Christophe & Jones, Colin N., 2018. "Multi-time scale coordination of complementary resources for the provision of ancillary services," Applied Energy, Elsevier, vol. 229(C), pages 1164-1180.
    2. Jidong Wang & Jiahui Wu & Yingchen Shi, 2022. "A Novel Energy Management Optimization Method for Commercial Users Based on Hybrid Simulation of Electricity Market Bidding," Energies, MDPI, vol. 15(12), pages 1-24, June.
    3. Fraunholz, Christoph & Keles, Dogan & Fichtner, Wolf, 2021. "On the role of electricity storage in capacity remuneration mechanisms," Energy Policy, Elsevier, vol. 149(C).
    4. Carvajal, S.X. & Serrano, J. & Arango, S., 2013. "Colombian ancillary services and international connections: Current weaknesses and policy challenges," Energy Policy, Elsevier, vol. 52(C), pages 770-778.
    5. Mastropietro, Paolo & Rodilla, Pablo & Rangel, Lina Escobar & Batlle, Carlos, 2020. "Reforming the colombian electricity market for an efficient integration of renewables: A proposal," Energy Policy, Elsevier, vol. 139(C).
    6. Yerasyl Amanbek & Aidana Kalakova & Svetlana Zhakiyeva & Korhan Kayisli & Nurkhat Zhakiyev & Daniel Friedrich, 2022. "Distribution Locational Marginal Price Based Transactive Energy Management in Distribution Systems with Smart Prosumers—A Multi-Agent Approach," Energies, MDPI, vol. 15(7), pages 1-18, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mayyas Alsalman & Vian Ahmed & Zied Bahroun & Sara Saboor, 2023. "An Economic Analysis of Solar Energy Generation Policies in the UAE," Energies, MDPI, vol. 16(7), pages 1-25, March.
    2. Shan, Kui & Wang, Shengwei & Zhuang, Chaoqun, 2021. "Controlling a large constant speed centrifugal chiller to provide grid frequency regulation: A validation based on onsite tests," Applied Energy, Elsevier, vol. 300(C).
    3. Machado, Renato Haddad Simões & Rego, Erik Eduardo & Udaeta, Miguel Edgar Morales & Nascimento, Viviane Tavares, 2022. "Estimating the adequacy revenue considering long-term reliability in a renewable power system," Energy, Elsevier, vol. 243(C).
    4. Mastropietro, Paolo & Rodilla, Pablo & Rivier, Michel & Batlle, Carlos, 2024. "Reliability options: Regulatory recommendations for the next generation of capacity remuneration mechanisms," Energy Policy, Elsevier, vol. 185(C).
    5. Alizadeh, Ali & Kamwa, Innocent & Moeini, Ali & Mohseni-Bonab, Seyed Masoud, 2023. "Energy management in microgrids using transactive energy control concept under high penetration of Renewables; A survey and case study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 176(C).
    6. Gustavo Adolfo Gómez-Ramírez & Carlos Meza & Gonzalo Mora-Jiménez & José Rodrigo Rojas Morales & Luis García-Santander, 2023. "The Central American Power System: Achievements, Challenges, and Opportunities for a Green Transition," Energies, MDPI, vol. 16(11), pages 1-20, May.
    7. Liu, Zhan & Yang, Xuqing & Liu, Xu & Wang, Wenbin & Yang, Xiaohu, 2021. "Evaluation of a trigeneration system based on adiabatic compressed air energy storage and absorption heat pump: Thermodynamic analysis," Applied Energy, Elsevier, vol. 300(C).
    8. Fraunholz, Christoph & Miskiw, Kim K. & Kraft, Emil & Fichtner, Wolf & Weber, Christoph, 2021. "On the role of risk aversion and market design in capacity expansion planning," Working Paper Series in Production and Energy 62, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    9. Fett, Daniel & Fraunholz, Christoph & Keles, Dogan, 2021. "Diffusion and system impact of residential battery storage under different regulatory settings," Energy Policy, Elsevier, vol. 158(C).
    10. Edgardo Cayon & Julio Sarmiento, 2022. "The Impact of Coskewness and Cokurtosis as Augmentation Factors in Modeling Colombian Electricity Price Returns," Energies, MDPI, vol. 15(19), pages 1-8, September.
    11. Durmaz, Tunç & Acar, Sevil & Kızılkaya, Simay, 2024. "Generation failures, strategic withholding, and capacity payments in the Turkish electricity market," Energy Policy, Elsevier, vol. 184(C).
    12. Cinzia Bonaldo & Fulvio Fontini & Michele Moretto, 2022. "The Energy Transition and the Value of Capacity Remuneration Mechanisms," Working Papers 2022.16, Fondazione Eni Enrico Mattei.
    13. Kumar, T. Bharath & Singh, Anoop, 2021. "Ancillary services in the Indian power sector – A look at recent developments and prospects," Energy Policy, Elsevier, vol. 149(C).
    14. Christos K. Simoglou & Pandelis N. Biskas, 2023. "Capacity Mechanisms in Europe and the US: A Comparative Analysis and a Real-Life Application for Greece," Energies, MDPI, vol. 16(2), pages 1-32, January.
    15. Wang, Huilong & Wang, Shengwei, 2021. "A hierarchical optimal control strategy for continuous demand response of building HVAC systems to provide frequency regulation service to smart power grids," Energy, Elsevier, vol. 230(C).
    16. Bo, Zeng & Shaojie, Ouyang & Jianhua, Zhang & Hui, Shi & Geng, Wu & Ming, Zeng, 2015. "An analysis of previous blackouts in the world: Lessons for China׳s power industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 1151-1163.
    17. William Niebles-Nunez & Leonardo Niebles-Nunez & Lorena Hoyos Babilonia, 2022. "Energy Financing in Colombia: A Bibliometric Review," International Journal of Energy Economics and Policy, Econjournals, vol. 12(2), pages 459-466, March.
    18. Xin-gang, Zhao & Shuran, Hu & Hui, Wang & Haowei, Chen & Wenbin, Zhang & Wenjie, Lu, 2024. "Energy, economic, and environmental impacts of electricity market-oriented reform and the carbon emissions trading: A recursive dynamic CGE model in China," Energy, Elsevier, vol. 298(C).
    19. Brito-Pereira, Paulo & Mastropietro, Paolo & Rodilla, Pablo & Barroso, Luiz Augusto & Batlle, Carlos, 2022. "Adjusting the aim of capacity mechanisms: Future-proof reliability metrics and firm supply calculations," Energy Policy, Elsevier, vol. 164(C).
    20. Osorio, Sebastian & van Ackere, Ann & Larsen, Erik R., 2017. "Interdependencies in security of electricity supply," Energy, Elsevier, vol. 135(C), pages 598-609.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:16:y:2023:i:6:p:2876-:d:1102672. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.