[Objective] To accommodate the decline in the share of thermal power generation in the power mix

which is expected to drop from 65% in 2016 to 40% in 2025

China is pursuing power system reforms to adapt to the productive forces development. One of the important means is the development of a power spot market. The electricity spot market is the core of the national unified electricity market construction. Simulating long-term spot electricity prices is of great significance for equipment selection and revenue assessment in thermal power plant flexibility retrofit projects. [Methods] This study proposes a method for simulating long-term spot electricity prices under different power source structures

including clarifying electricity market members and their relationship

establishing a method to calculate thermal power plants' marginal costs

providing a bidding method for co-operated heat and power plants

and simulating long-term spot electricity prices under different power source structures. [Results] The research shows over 74% of the simulated values have a deviation within ±50 yuan/(MW·h) from actual values. [Conclusion] This paper proposes a model to simulate long-term spot electricity prices and presents the results of a full-year continuous operation of future power systems. This simulation method is applied to provide a basis for flexibility upgrades and long-term economic evaluations of energy storage. It also provides methods for calculating the marginal cost of thermal power and a method for co-operated heat and power bidding

leading to the following conclusions. The simulation results are obtained based on the entire process of determining spot electricity prices. Under the current power source structure

spot electricity prices are determined by thermal power

while under the future power source structure

spot electricity prices are determined by both thermal power and energy storage. Under the future power source structure

spot electricity prices and thermal power generation show seasonal differences: they are higher in summer and winter. This can provide a reference for thermal power bidding and quantitatively estimate the economic benefits of flexibility upgrade schemes for thermal power plants. Thermal-electric coordination technology can increase the daily revenue of coal-fired power plants in the electricity market. Taking a 660 MW rated coal-fired unit as an example

this technology enables it to earn 3.52 million yuan more per day than traditional combined heating and power generation methods. It can also reduce the power and capacity requirements of energy storage systems. This paper will be of interest to electricity market designers

participants

and decision-makers involved in thermal power plant flexibility retrofitting.