Pumped Storage Power Station Participation in Electricity Market Bidding Optimization Strategy Analysis

With the swift advancement of fluctuating renewable energy production, the demand for flexible adjustment resources such as pumped storage has significantly increased. To enhance the enthusiasm for constructing pumped storage power stations and ensure their revenue levels, China's electricity pricing system is transitioning from a two-part tariff to a spot market pricing model. Due to its early development stage, the spot market system is not yet mature, and the participation in the ancillary services market is insufficient, making it difficult to reflect the flexibility value of pumped storage power stations. To this end, we firstly analyse the forecast of the tariff mechanism of pumped storage power plants under the market environment, determine the possible risks of tariff fluctuations in the current and future development stages of the tariff mechanism, and establish a risk- return model for power plants based on the CVaR value. Combined with the analysis of the example, we compare the two cases of only participating in the electric energy market and participating in the market of electric energy auxiliary services, highlighting the criticality of the development and improvement of auxiliary services to the income of pumped storage power stations. And at the same time, using the established risk-reward model, we compare returns that include risk considerations with conventional returns to assess the model’s practicality in reducing risk.