The increasing energy demand in China due to urbanization has made the study of different energy policies in big cities a crucial topic of discussion. This is a complex problem since the electricity market is a multi-actor system where various actors may have a great influence on the main issue we are focusing on. In order to reduce the energy shortage and CO2 emissions problems existed in electricity market, a case study on Shanghai was conducted. The model built in this paper was used to forecast the electricity demand and supply under different energy policy scenarios and also to analyze the associated reductions in emissions of CO2. Three different policies were implemented in the model: regulating the electricity price, changing the structure of primary energy consumption of the electricity generating system, building up an inter-regional integrated electricity market. Simulation results show that the problems can be mitigated to some extent under these policies.