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- Automated Bilateral Trading of Energy by Alliances in Multi-Agent Electricity MarketsPublication . Algarvio, HugoABSTRACT: In liberalized markets, consumers can choose their electricity suppliers or be part of an energy community. The problem with communities is that they may not have enough weight to trade in markets, which can be overcome by forming coalitions. Electricity is traded in spot markets or through bilateral contracts involving consumers and suppliers. This paper is devoted to bilateral contracting, modeled as a negotiation process involving an iterative exchange of offers and counter-offers. It focuses on coalitions of energy communities. Specifically, it presents team and single-agent negotiation models, where each consumer has strategies, tactics, and decision models. Coalition agents are equipped with intra-team strategies and decision protocols. It also describes a study of bilateral contracts involving a seller agent and a coalition of energy communities. By allying into a coalition, members of energy communities reduced their average costs for electricity by between 2% (large consumers) and 64% (small consumers) according to their consumption. Their levelized cost reduction was 19%. The results demonstrate the power of coalitions when negotiating bilateral contracts and the benefit of a low-consumption members alliance with larger players.
- Bilateral Contracting and Price-Based Demand Response in Multi-Agent Electricity Markets: A Study on Time-of-Use TariffsPublication . Algarvio, Hugo; Lopes, FernandoABSTRACT: Electrical energy can be traded in liberalized organized markets or by negotiating private bilateral contracts. Competitive markets are central systems where market players can purchase and sell electrical energy. Bilateral contracting consists typically in a private negotiation of power over several months or years between two parties. Price-based demand response considers the active participation of consumers in electricity markets. Consumers adopt demand response programs when responding to market prices or tariffs, as they change over time. Those tariffs can be proposed by retailers by considering their load shape goals, influencing consumers to change their behavior. Consumers may adopt strategies from two different groups, namely by curtailing energy at times of high prices (e.g., peak and intermediate periods) and rescheduling energy away from those times to other times (shifting). This article considers bilateral contracting in electricity markets with demand response. It investigates how curtailment and shifting affect the energy quantity and energy cost of consumers that adopt a time-of-use tariff involving three block periods (i.e., base, intermediate and peak periods). The results indicate that consumers respond to changes in energy price according to their consumption flexibility, while retailers do not always change energy price in response to consumers' efforts to change their consumption patterns. On average, by considering a 5% consumption reduction in the intermediate and peak periods by a consumer agent, a retailer agent reduces the energy price only by 1.5%.
- Decision support for energy contracts negotiation with game theory and adaptive learningPublication . Pinto, Tiago; Vale, Zita; Praça, Isabel; Pires, E. J. Solteiro; Lopes, FernandoThis paper presents a decision support methodology for electricity market players’bilateral contract negotiations. The proposed model is based on the application of game theory, using artificial intelligence to enhance decision support method’s adaptive features. This model is integrated in AiD-EM (Adaptive Decision Support for Electricity Markets Negotiations), a multi-agent system that provides electricity market players with strategic behavior capabilities to improve their outcomes from energy contracts’ negotiations. Although a diversity of tools that enable the study and simulation of electricity markets has emerged during the past few years, these are mostly directed to the analysis of market models and power systems’ technical constraints, making them suitable tools to support decisions of market operators and regulators. However, the equally important support of market negotiating players’ decisions is being highly neglected. The proposed model contributes to overcome the existing gap concerning effective and realistic decision support for electricity market negotiating entities. The proposed method is validated by realistic electricity market simulations using real data from the Iberian market operator—MIBEL. Results show that the proposed adaptive decision support features enable electricity market players to improve their outcomes from bilateral contracts’ negotiations.
- Management of local citizen energy communities and bilateral contracting in multi-agent electricity marketsPublication . Algarvio, HugoABSTRACT: Over the last few decades, the electricity sector has experienced several changes, resulting in different electricity markets (EMs) models and paradigms. In particular, liberalization has led to the establishment of a wholesale market for electricity generation and a retail market for electricity retailing. In competitive EMs, customers can do the following: freely choose their electricity suppliers; invest in variable renewable energy such as solar photovoltaic; become prosumers; or form local alliances such as Citizen Energy Communities (CECs). Trading of electricity can be done in spot and derivatives markets, or by bilateral contracts. This article focuses on CECs. Specifically, it presents how agent-based local consumers can form alliances as CECs, manage their resources, and trade on EMs. It also presents a review of how agent-based systems can model and support the formation and interaction of alliances in the electricity sector. The CEC can trade electricity directly with sellers through private bilateral agreements. During the negotiation of private bilateral contracts, the CEC receives the prices and volumes of their members and according to its negotiation strategy, tries to satisfy the electricity demands of all members and reduce their costs for electricity.
- Risk-Sharing Contracts and risk management of bilateral contracting in electricity marketsPublication . Algarvio, HugoABSTRACT: The liberalization of the electricity sector has conducted to the establishment of spot markets, derivative markets and private bilateral contracts to trade electricity, increasing the competition in the sector. Spot markets are composed of day-ahead, intraday and real-time markets, and their prices are highly volatile. Derivative markets are composed of physical and financial products to hedge against spot price volatility. Players can set the terms and conditions of private bilateral contracts but these have several risks that can be mitigated using a risk management process composed of three phases: risk assessment, characterization and hedging. This paper focuses on both risk attitude and risk-sharing, and how they can influence the negotiation of the price. It presents the standard and non-standard designs of a new type of contract, the Risk-Sharing Contract (RSC). Furthermore, it describes the trading process of these contracts and introduces a negotiation strategy for dealing with risk. It also presents case studies on bilateral contracting involving the negotiation of RSCs, where different demand and supply agents interact and trade according to the rules of an alternating offers protocol. Results from the case studies prove the benefit of RSCs to hedging against spot price volatility, benefiting risk-averse players by reducing the price risk and conducting mutually beneficial agreements. While the use of derivatives products can conduct losses/revenues between -15% and 3% concerning the spot market, by using non-standard RSCs those outputs vary between -1% and 3% with substantially less risk.
- The Economic Sustainability of Variable Renewable Energy Considering the Negotiation of Different Support SchemesPublication . Algarvio, HugoABSTRACT: The increase in the prices of fossil fuels and environmental issues are leading to a high investment in wind power and solar photovoltaic all over Europe, reducing its dependence on imported fossil fuels. The European countries started incentive programs for investment in these renewable technologies, which consisted of fixed and market premium feed-in tariffs. These feed-in schemes involve long-term contracts with updated prices over inflation. These incentives highly increase the investment and installation of new renewable capacity in Europe. They lead to high renewable penetrations in power systems but originate a tariff deficit due to the difference between market prices and the tariffs paid to these technologies. End-use consumers pay the tariff deficit on retail tariffs. This work analyzes the market-based remuneration of variable renewable energy considering different support schemes and the role of risk-sharing contracts in mitigating the spot price volatility. It presents models able to negotiate bilateral contracts considering risk management, notably risk attitude and risk sharing, bid establishment, and clause (by-laws) negotiation. Furthermore, to evaluate the economic sustainability of renewable generation in Spain, it presents a study for different 12-year support schemes starting in 2010. The results confirmed that, in the case of using risk-sharing contracts during crisis periods, the incidence of low energy prices (price "cannibalization") decreases, such as the tariff deficit. Furthermore, in the case of high-inflation periods, these contracts hedge against the increase in retail prices, resulting in an economic surplus for consumers.