Based on the construction of electric power spot market in China, this paper firstly studies the main problems of electric power spot market settlement from the perspective of physical delivery of mid-and-long term contracts. Secondly, the paper analyses the function of the physical contract to stabilize the market price risk, and puts forward a settlement mechanism considering the characteristics of power users on the basis of ensuring fairness and realizing the risk avoidance of physical contract. Finally, taking renewable energy as the background of the power system with a high proportion of renewable energy, considering the demand of renewable energy utilization, combined with the mid-and-long term physical contract settlement mechanism, this paper demonstrates the economy and practicability of the proposed settlement mechanism through a case study.