Long-Term Electricity Purchase Allocation Strategy and Risk Evaluation in Power Markets

This paper presents an integrated framework for the optimal management of electric energy purchase allocation and risk evaluation for load service entities (LSEs). We propose the framework of power portfolio of combined physical forward contracts and spot markets, which suggests that the forward contracts should have different on-peak and off-peak prices in accord with retail prices distinguishing on-peak and off-peak at the early stage of marketing operation of China electricity industry. The numerical results give the LSEs reasonable profits and risk hedging. The presented framework gives one possible and effective method for the optimal power portfolio and risk management in incomplete power markets