Review of application research on options in electricity market

Electricity market participants are faced with unprecedented risks under deregulated environment. Power option contract is one of the most effective instruments for electricity market players to avoid trading risks. Classification methods in accordance with the characteristics of power options are summed up, and the application research status of risk management, interruptible load pricing, congestion management, Ancillary services and power asset pricing is reviewed, and the basic framework for power options trading is proposed. The analysis for power options pricing shows that the development of complex mixed-model for power price and the methods to determine the theoretical prices for power options prices are the important research directions for the futures.