Power industry restructuring and hence establishment of electricity markets lead to significant challenges to power system planning

operation and control. Many experiences have been gained and lessons learnt from operation of existing power markets. However in the new market environment

some old power system planning

operation and control issues become much more difficult to solve and new problems arise

and up to now quite a lot of problems still remain unsolved. In this paper challenges of marketbased operation of power systems are discussed including: market structure de sign

IT system requirement

congestion management

ancillary service provision

market power in electricity markets

strategic bidding for generation neration and network expansion in the market environment. The objective of this paper is to stimulate further discussions and investigations rather than to solve these problems.