Study On The Optional Strategy Of Power Supplies With Option Trading

The rapid development of China’s power industry marks the electricity market ofdiversification pattern has been formed,“plant-grid separation”is an important symbol ofremarkable progress was made in electric power system reform. Therefore, itis extremelyimportant for the generation companies to choose the optimal strategy in a power generationside introducing competition mechanism. At the same time, the generation companies facehuge risk of electricity market with the introduction of market mechanisms. More and moreelectricity market participants profoundly recognize the importance of financial markets foreffectively circumvent and reasonably managing these risks. As a result, elated fields willstudy focus on how to organic combine the electric power market and financial marketeffectively and analyze the impact of the introduction of financial derivatives lateral powergeneration companies on the optimal strategy.The benefits of generation companies in electricity market depends on their strategicchoices in the market, and the strategy is mutual influence between them. Game theory ofNash equilibrium theory become a simulation strategy behavior between generationcompanies, and provide the scientific and rational theory to guide the effective tools. On theone hand,The paper establish a Stackelberg equilibrium model (leadership-follower) toevaluate impacts of options for electricity market equilibrium and optimal strategy behaviorof power suppliers. To solve such a sub-game perfect Nash equilibrium by using backwardinduction method, and analysis the different types of market participants (leader and follower)strategy behavior of different effects. On the other hand, the paper analysis a detailedcomparative results under the Nash equilibrium model(Cournot and Stackelberg).The results shows that：The introduction of options can suppress the surge of electricityfrom a certain extent; The followers of power generation side, namely, small or new energypower generation companies could combine more quickly and effectively the financial marketwith electricity market and optimize the allocation of resources more efficiently, and furtherpromote the reform process in the power industry. So, we should encourage regional electricity generators and new energy generators to join the electric power suppliers side in afair and effective competition condition. So as to realize the goal of enterprises’ rapidlyexpanding scale and breaking the power bottleneck constraints, further provide reliableenergy guarantee for the economic development.