Abstract: The prediction error of wind power reflects its random characteristic and the fluctuation of wind power describes its step-by-step changing characteristic at a specific time and space scale. In order to determine the reserve capacity needed by the prediction error and the fluctuation of wind power, a novel reserve capacity demand model is proposed through analyzing the randomness and the fluctuation of wind power. By considering the relationship between reserve capacity demand and system operation reserve, the wind power operation risk is defined, and then a dispatch model of wind power operation risk and reserve capacity coordination and optimization is proposed. In this model, the costs of load shedding and wind energy waste due to wind power operation reserve insufficiency are taken into consideration via a penalty function. Case studies based on modified IEEE 6-bus and IEEE 118-bus system show the validity and effectiveness of the proposed model. The proposed model provides a dispatch method which utilizes the wind energy with a more economic and safer way while having higher penetration.