Preferential accommodation of regenerable energy such as hydropower

wind power is an important objective for power generation optimization in the present situation. However

reproducible power is not equally distributed in different periods and seasons

which is contrary to the equal output distribution practice of local thermal power unit in terms of the “equal fulfillment of contract” of open

fair and impartial power dispatching. Thus

it cannot reduce water and wind power curtailment as much as possible. Based on the hedging theory and with the promise of fulfilling annual contract

a power purchase optimization model using the strategy of “decrease and compensation” is proposed. Then

using the largescale system decompositioncoordination theory

the overall “nearoptimal” goal is achieved relying on the monthly local optimization. Based on the power purchase optimization of “decrease and compensation”

it can promote interprovincial power exchange and effectively reduce water and wind power curtailment

thus enhancing economic and social benefits of the provincial power grid. This model is applied to a provincial power grid of China in 2013. Results show that the power purchase hedging optimization model is feasible and effective. This work is supported by National Natural Science Foundation of China (No. 71401055).