Trading mechanism for multiple market entities in electricity spot market considering market power abuse

This paper addresses market power abuse in electricity transactions and proposes a trading framework involving conventional generators, renewable energy generators, and virtual power plants (VPPs) in the spot market. Market power abuse can lead to inefficient resource allocation, price distortions, and social welfare losses. The proposed method models day-ahead bidding as a multi-agent non-cooperative game, introducing market power indices and incorporating penalty costs for market power into participant optimization. The optimization framework consists of three stages: day-ahead data declaration, market clearing optimization, and participant strategy optimization. Market participants aim to maximize profits while accounting for penalty costs, participating in the spot market through quantity and price bids. The marginal clearing price (MCP) is used for market clearing, with game equilibrium achieved through multiple rounds of participant interactions. Case studies demonstrate that this mechanism enhances market efficiency, promotes the accommodation of renewable energy, and mitigates market power abuse. The results verify the framework's effectiveness in improving renewable energy utilization and operational efficiency in modern electricity markets.