Effects of Electricity Futures on Power Plants Strategies

Electricity future has been discussed by many documents for using electricity future to reduce prices volatility of electricity market, but it is scarcely discussed what behaviour of power plants may be optimal or real combined with a specific market structure, so it is impossible to find out a workable approach to avoid the impact from price volatility for power plants or electricity market. In view of the case, this paper mainly researched, concerning the introduction of electricity futures, the power plants´ feasible allocation strategies of generation capacity and their maximum profits combined with oligopolistic electricity market structure. Market price models are constructed in this paper concerned both of electricity futures being and not. On the basis of comparison, it is proved that the introduction of electricity futures is helpful to stabilize electricity prices. In the meanwhile, it is found that there is a sole optimal strategy for power plants to increase their profits, and the strategy is of a Nash-equilibrium. Furthermore, using the data from a power plant in China, the paper indicated that the optimal strategy concerning electricity futures will optimize power plants generation structure.