Against the backdrop of accelerated development of a unified national electricity market

ensuring generation capacity adequacy across the entire grid in the most economically optimal manner has become a critical issue. This paper proposes an inter-provincial reliability option market mechanism adaptable to the two-level electricity market structure

aiming to achieve optimal allocation of generation capacity resources across broader regions. First

by comparing with traditional capacity market mechanisms

it elaborates on the advantages of the inter-provincial reliability option mechanism and its applicability in China's context. Then

the basic framework of the inter-provincial reliability option market is designed from perspectives including product design

trading mechanisms

and key parameter configuration. Subsequently

a coordinated clearing mechanism integrating inter-provincial and intra-provincial reliability options is proposed

along with pricing and settlement mechanisms designed to achieve inter-provincial benefit coordination objectives. Finally

the effectiveness of the proposed mechanism is verified through a case study involving two buyer provinces and two seller provinces. In contrast

implementation challenges and issues of the inter-provincial reliability option mechanism are analyzed within the context of China’s inter-provincial electricity market.