A Statistical Model for Setting Price Cap in Electricity Market

To avoid suppliers abusing market power and reduce the financial risk of power purchasers, it is necessary to set up a rational price cap for the markets employing single-buyer model. System surplus capacity percent (SCP) is firstly put forward to reflect the condition of the electricity supply and demand. Based on the historical data of the Zhejiang electricity market in China, the relationship between average electricity price and price cap under the different growth rates of bidding load is analyzed by applying the statistical relationship between SCP and average electricity price. According to the growth rate of bidding load and the average generating cost, the model for setting price cap proposed in the paper can be used to set up the rational price cap based on the return rate of capital. The numerical results show that the model is simple and easy to implement