Optimizing cross-regional electricity transaction concerning transmission charges: A new market mechanism design

Given the unbalanced distribution of power resources and demands in geography, cross-regional electricity transactions alleviate the conflict through the long-distance power supply. To ensure sustainable, efficient transactions, the market mechanism addressing the unavoidable transmission charges is essential for balancing the interests of all parties. This research designs a mechanism based on the Generalized Vickrey-Clarke-Groves (G-VCG) and threshold value setting considering generators' withholding behavior and power transmission charges. The theoretical analysis proves that this mechanism maximizes social welfare while satisfying individual rationality, incentive compatibility and weak budget balance. It can encourage all participants to report truthful information and motivate more power generation. Numerical studies of the PJM electricity market also demonstrate the effectiveness of this mechanism in the electricity market. The proposed mechanism contributes to new guidance and practical references for achieving fair and efficient transactions in the crossing-regional electricity market and improving the vigor of market participants.