Design of a Two-Stage Pricing Mechanism for Renewable Energy Participation in the Electricity Market

Due to Chinese strong support for the development of renewable energy, the consumption of renewable energy power in current policy of most provinces is "guaranteed consumption". Renewable energy enterprises take advantage of this rule to adopt high quotation behavior in the electricity market competition, and their consumption prices are basically similar to those of coal-fired power generation enterprises. The existing consumption policy does not reflect either the cost which incurred by the high proportion of clean energy consumption for the power system or the adjustment of the value which produced by surplus electricity use. In this paper, we propose a two-stage trading mechanism for renewable energy participation in the power market. The idea is that in the first stage of trading, the "quantity preservation" constraint is not considered, and all units are calculated with the system power supply cost as the target for optimal clearing. In the second stage of trading, the consumption price of surplus power is used as the variable to calculate the optimal trading result that satisfies the renewable energy consumption constraint. Through the simulation analysis, we can see that this mechanism can guarantee the consumption of renewable energy power, meanwhile, it can play an important role in reducing the energy cost of customers and guiding the benign development of renewable energy power.