Automated Bilateral Trading of Energy by Alliances in Multi-Agent Electricity Markets

ABSTRACT: 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.info:eu-repo/semantics/publishedVersio

Multi-step optimization of the purchasing options of power retailers to feed their portfolios of consumers

ABSTRACT: The liberalization of the retail market of electricity increased the tariff choice of end-use consumers. Retailers compete in the retail market for customers, obtaining private portfolios of end-use consumers to manage. Retailers buy electricity at wholesale markets to feed their customers' demands. They can use spot, derivatives, and bilateral markets to acquire the energy they need. The increasing levels of variable renewable energy sources trading at spot markets, increase the price volatility of these markets. To hedge against the volatility of spot prices, retailers may negotiate standard physical or financial bilateral contracts at derivatives markets. Alternatively, they can also negotiate private bilateral contracts. This article addresses the optimization of the retailers purchasing options, to increase their risk-return ratio from electricity markets, and offer more competitive tariffs to consumers. Considering the risk attitude of retailers, they use a multi-step purchasing model composed of a multi-level risk-return optimization and a decision support system. The article presents an agent-based study considering a retailer with a portfolio of 312 real-world consumers. Risk-seeking and risk-neutral retailers obtained a return up to 38%, less than 7% of the optimal return. However, risk-neutral retailers are subject to four times higher risk in their returns than risk-seeking retailers. The results support the conclusion that wholesale markets of electricity are more favourable to risk-seeking retailers, considering their real returns.info:eu-repo/semantics/publishedVersio

Agent-based model of citizen energy communities used to negotiate bilateral contracts in electricity markets

ABSTRACT: The worldwide targets for carbon-neutral societies increased the penetration of distributed generation and storage. Smart cities now play a key role in achieving these targets by considering the alliances of their demand and supply assets as local citizen energy communities. These communities need to have enough weight to trade electricity in wholesale markets. Trading of electricity can be done in spot markets or by bilateral contracts involving customers and suppliers. This paper is devoted to bilateral contracting, which is modeled as a negotiation process involving an iterative exchange of offers and counter-offers. This article focuses on local citizen energy communities. Specifically, it presents team and single-agent negotiation models, where each member has its sets of strategies and tactics and also its decision model. Community agents are equipped with intra-team strategies and decision protocols. To evaluate the benefits of CECs, models of both coalition formation and management have been adapted. This paper also describes a case study on forward bilateral contracts, involving a retailer agent and three different types of citizen energy communities. The results demonstrate the benefits of CECs during the negotiation of private bilateral contracts of electricity. Furthermore, they also demonstrate that in the case of using a representative strategy, the selection of the mediator may be critical for achieving a good deal.info:eu-repo/semantics/publishedVersio

The Economic Sustainability of Variable Renewable Energy Considering the Negotiation of Different Support Schemes

ABSTRACT: 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.info:eu-repo/semantics/publishedVersio

The role of local citizen energy communities in the road to carbon-neutral power systems: outcomes from a case study in Portugal

ABSTRACT: Global warming contributes to the worldwide goal of a sustainable carbon-neutral society. Currently, hydroelectric, wind and solar power plants are the most competitive renewable technologies. They are limited to the primary resource availability, but while hydroelectric power plants (HPPs) can have storage capacity but have several geographical limitations, wind and solar power plants have variable renewable energy (VRE) with stochastic profiles, requiring a substantially higher investment when equipped with battery energy storage systems. One of the most affordable solutions to compensate the stochastic behaviour of VRE is the active participation of consumers with demand response capability. Therefore, the role of citizen energy communities (CECs) can be important towards a carbon-neutral society. This work presents the economic and environmental advantages of CECs, by aggregating consumers, prosumers and VRE at the distribution level, considering microgrid trades, but also establishing bilateral agreements with large-scale VRE and HPPs, and participating in electricity markets. Results from the case-study prove the advantages of CECs and self-consumption. Currently, CECs have potential to be carbon-neutral in relation to electricity consumption and reduce consumers' costs with its variable term until 77%. In the future, electrification may allow CECs to be fully carbon-neutral, if they increase their flexibility portfolio.info:eu-repo/semantics/publishedVersio

Management of local citizen energy communities and bilateral contracting in multi-agent electricity markets

ABSTRACT: 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.info:eu-repo/semantics/publishedVersio

Least-cost non-RES thermal power plants mix in power systems with majority penetrations of renewable energy

ABSTRACT: The ambitious targets of the European Union (EU) for a greater penetration of renewable energy sources (RES) in all areas of activity have led to power systems with growing levels of variable RES (VRES) all over the EU. Considering these targets, the EU countries presented their National Energy and Climate Plans (NECP) with their expected capacity until 2030. The NECPs considered a relevant increase in the VRES capacity and in some cases a decrease in the capacity of dispatchable power plants. VRES have near-zero marginal costs and increase the volatility of the net-load due to the stochastic profile of their production. These characteristics increase the need to maintain fast-response dispatchable power plants to guarantee the security of supply and also decrease market prices. Thus, governments promote externalities, as capacity mechanisms and other incentives to these players, guaranteeing their economic sustainability. This study presents the optimization of the non-RES thermal capacity of the Iberian power system by 2030, considering the least-cost algorithm. Considering a cooperative scenario between Portugal and Spain, it is possible to reduce the system costs by 17.40%, the curtailments quantity by 21.93%, the number of market-splitting hours by 43.26% and the dioxide carbon emissions by 4.76%.info:eu-repo/semantics/publishedVersio

Strategic Bidding of Retailers in Wholesale Markets: Continuous Intraday Markets and Hybrid Forecast Methods

ABSTRACT: The deregulation process of the electricity sector has led to competition in wholesale and retail markets. In particular, retailers submit bids to wholesale markets to satisfy the energy needs associated with portfolios of end-use customers. This paper describes a strategic process for retailers bidding in a wholesale market composed of a day-ahead market, an intraday market, and a balancing market. It considers a market design that involves a hybrid model for the intraday market, based on daily auctions and a continuous procedure. The paper also presents a computational study to illustrate and test both the market design and the strategic bidding process of retailers. The results confirm the advantages of considering a continuous intraday market, show that bidding in short-term markets is more beneficial than bidding in medium-term markets, and indicate important aspects to consider when selecting customers to add to the portfolios of retailers.info:eu-repo/semantics/publishedVersio

Simple and linear bids in multi-agent daily electricity markets: a preliminary report

ABSTRACT: Variable generation (VG) has several unique characteristics compared to those of traditional thermal and hydro-power plants, notably significant fixed capital costs, but near-zero or zero variable production costs. Increasing the penetration of VG tend to reduce energy prices over time, increase the occurrence of zero or negatively priced periods, and reduce the cleared energy levels of existing plants. This paper presents an overview of an agent-based system, called MATREM, to simulate electricity markets. Special attention is devoted to a case study that aims at analyzing the behavior of a simulated day-ahead market in situations with increasing levels of wind generation, and also comparing market schedules and prices in situations involving either simple and linear bids.info:eu-repo/semantics/publishedVersio

Coalitions of end-use customers in retail electricity markets: a real-world case study involving five schools for children

ABSTRACT: The key mechanisms for purchasing and selling electrical energy include electricity pools and bilateral contracts. This article is devoted to bilateral contracting, which is modeled as a negotiation process involving an iterative exchange of offers and counter-offers. It focuses on coalitions of end-use consumers and describes a case study involving five schools for children located in England. The schools decide to ally into a coalition to strengthen their bargaining positions and, hopefully, to obtain better tariffs. To this end, they rely on a coordinator agent, who is defined from the group of five schools, by selecting either the “most powerful” school or the “best negotiator” school. The coordinator takes decisions according to either a “majority” rule, a “consensus” rule, or an “unanimity” rule. The simulations are performed with an agent-based system, called MATREM (for Multi-agent TRading in Electricity Markets). Although preliminary, the results suggest that coalition formation and management is beneficial to end-use customers, since the price agreed in the new forward contracts is more favorable to these agents, particularly when the coordinator is the “best negotiator” agent and considers the “unanimity” decision rule.info:eu-repo/semantics/publishedVersio