Issues and Strategies for the Dispatching and Trading of the Three Gorges Large Hydropower System

China’s electricity market reform has posed a real challenge to the large-scale hydropower system. Taking the world’s largest watershed hydropower system, the Three Gorges large hydropower system (TGLHS), as the engineering background, this study analyzes the issues and strategies of dispatching and trading in the electricity market. The analysis indicates that the TGLHS exhibits unique difficulties because of transprovincial and transregional power transmission. Major issues including the multi-dimensional and multi-time-scale nested allocation of hydropower energy, the bidding and performance of cascaded hydropower plants in multiple electricity markets, as well as multiple uncertainties in the runoff; electricity prices in multiple markets are also elaborated upon. The corresponding suggested strategies are proposed to cope with the aforementioned issues: (1) for multi-dimensional and multi-scale nested allocation problems, it is necessary to comprehensively consider monthly market transactions and priority generation plans, and establish a profit maximization model; (2) propose a bidding decision-making linkage and segmented bidding optimization model for cascades upstream and downstream hydropower stations; (3) construct a model for decomposing the annual and monthly planned electricity consumption curves and developing operational plans for giant cascade power stations that are suitable for cross-provincial and cross-regional power transmission and transformation; (4) a runoff, electricity price, and market distribution model has been proposed, laying the foundation for further research on multi-scale optimization models for hydropower. Finally, prospects for research on the participation of large-scale hydropower systems in the electricity market are summarized, expecting to promote the marketization of large cascaded hydropower systems. The dispatching and trading of the TGLHS implies that it is important and necessary to explore market theories and methods considering hydropower characteristics and operation needs.