In the domestic and foreign electricity spot markets with LMP mechanism

there is a risk that units cannot recover their operating cost or achieve the expected revenue due to the change of supply and demand

load forecasting deviation

emergency situation and other factors. In order to tackle this problem

compensation mechanisms have been established in various power markets to ensure the revenue of power generation units when operating according to the safe dispatch requirements of the transmission system operator. However

it also leads to the risk of power generation groups manipulating the compensation mechanism to exercise market power. Based on the uplift mechanism of PJM market in the United States

the impact of market participants’bidding strategies on their total revenue are studied through a three-node electrical grid example. The revenue gained in the market with uplift mechanism is compared with the revenue gained in the market without uplift mechanism. The manifestation of market power in the bidding compensation market is analyzed. In order to reduce the market power risk caused by the uplift payment

the monitoring methods of market power and the optimization methods of the compensation mechanism are proposed.