Settlement Mechanisms in The Day-Ahead Electricity Market: A Comparative Analysis of European Countries, The United States, and China

As the integration of renewable energy sources (RES) deepens, selecting an appropriate day-ahead (DA) market settlement mechanism (SM) becomes critical for balancing system efficiency and economic viability. This paper proposes a multi-dimensional quantitative evaluation framework to assess four typical SMs—Uniform Pricing (UP), Zonal Pricing (ZP), Locational Marginal Pricing (LMP), and Hybrid Pricing (HP)—across three core dimensions: short-term market efficiency, long-term investment incentives, and system operation costs. Through comparative analysis and numerical simulations in typical scenarios, the results show that no universally optimal SM exists independent of the physical system's conditions. Specifically, ZP enhances market liquidity in systems with sufficient transmission capacity but tends to obscure local bottlenecks under high-RES penetration, leading to implicit cross-subsidization and increased re-dispatch costs (RCs). In contrast, LMP internalizes network constraints through granular spatiotemporal price signals, effectively reducing RES curtailment and improving overall social welfare (SW). For transitioning markets requiring demand-side price stability, HP offers a practical compromise. Overall, SM design should be closely aligned with grid topology, resource endowments, and the stage of market reform.