Financial Bilateral Contract Negotiation in Wholesale Electricity Markets Using Nash Bargaining Theory

Yu, Nanpeng; Tesfatsion, Leigh; Liu, Chen‐Ching

doi:10.1109/tpwrs.2011.2162637

Cited by 57 publications

(26 citation statements)

References 31 publications

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“…In this paper, we assume each utility function is concave, differentiable, and u i t (q i t ) = 0 if q i t = 0. From a game theoretic perspective, each player in a negotiation must always keep in mind that a strategy of trying to unilaterally improve its own return at the expense of the other players will typically be self-defeating [20]. Therefore, we consider a cooperative game, in which each zone is motivated to negotiate with others in a collaborative way to jointly maximize their utility functions.…”

Section: Bargain-based Airflow Allocation Strategymentioning

confidence: 99%

Distributed flexibility characterization and resource allocation for multi-zone commercial buildings in the smart grid

Lian

Kalsi

et al. 2015

2015 54th IEEE Conference on Decision and Control (CDC)

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Abstract-The HVAC (Heating, Ventilation, and AirConditioning) system of commercial buildings is a complex system with a large number of dynamically interacting components. In particular, the thermal dynamics of each zone are coupled with those of its neighboring zones. In this paper, we study an agent-based approach to model and control commercial building HVAC system for providing ancillary services to the power grid. In the multi-agent-building-system (MABS), individual zones are modeled as agents that can communicate, interact, and negotiate with one another to achieve a common objective. We first propose a distributed characterization method on the aggregate airflow (and thus fan power) flexibility that the HVAC system can provide to the ancillary service market. A Nash-bargaining-based airflow allocation strategy is then proposed to track a dispatch signal while respecting the preference and flexibility of individual zones. Moreover, we devise a distributed algorithm to obtain the Nash bargaining solution via dual decomposition. Numerical simulations illustrate that the proposed distributed protocols are much more scalable than centralized approaches especially when the system becomes larger and more complex.

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Section: Bargain-based Airflow Allocation Strategymentioning

confidence: 99%

Distributed flexibility characterization and resource allocation for multi-zone commercial buildings in the smart grid

Lian

Kalsi

et al. 2015

2015 54th IEEE Conference on Decision and Control (CDC)

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“…Nash bargaining is an important tool from cooperative game theory [16]. Unlike noncooperative game theory (e.g., Nash Equilibrium), Nash bargaining theory assumes that participants are able to bargain directly with each other to reach binding agreements.…”

Section: Index Terms-mentioning

confidence: 99%

“…Transmission is needed to transport the RE output from n(g) to a power grid, and the RE-GenCo has sought out a TransCo to undertake the needed transmission investment. The agreement with the TransCo includes a 1 If this assumption is relaxed and the companies use their own forecasts, the model needs to incorporate the impact of forecasting accuracy on each company's utility function; see [16] for a treatment of a Nash bargaining problem in which this assumption is relaxed. 2 Schumacher et al [26] note that an incentive could be a policy initiative to promote transmission development.…”

Section: A Overviewmentioning

confidence: 99%

A Nash Approach to Planning Merchant Transmission for Renewable Resource Integration

Zhou

Tesfatsion

Liu

et al. 2013

IEEE Trans. Power Syst.

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1 Abstract-Major transmission projects are needed to integrate and to deliver renewable energy (RE) resources. Cost recovery is a serious impediment to transmission investment. A negotiation methodology is developed in this study to guide transmission investment for RE integration. Built on Nash bargaining theory, the methodology models a negotiation between an RE generation company and a transmission company for the cost sharing and recovery of a new transmission line permitting delivery of RE to the grid. Findings from a six-bus test case demonstrate the Pareto efficiency of the approach as well as its fairness, in that it is consistent with one commonly used definition of fairness in cooperative games, the Nash cooperative solution. Hence, the approach could potentially be used as a guideline for RE investors. The study also discusses the possibility of using RE subsidies to steer the negotiated solution towards a system-optimal transmission plan that maximizes total net benefits for all market participants. The findings suggest that RE subsidies can be effectively used to achieve system optimality when RE prices are fixed through bilateral contracts but have limited ability to achieve system optimality when RE prices are determined through locational marginal pricing. This limitation needs to be recognized in the design of RE subsidies. Index Terms-

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“…In organized RTO markets, the approaches used to procure renewable electricity include competitive solicitations, centralized auction or exchange, and bilateral contracting. Where there is a sufficiently competitive supplier market, bilateral contracting through forward or future trading can be used in addition to competitive solicitations (Yu et al 2010;Kirby 2007). utility-driven procurement is typically conducted for incremental supply.…”

Section: Market Contexts and Procurementmentioning

confidence: 99%

Procurement Options for New Renewable Electricity Supply

Kreycik¹,

Couture²,

Cory³

2011

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ERCOT Executive SummaryState renewable portfolio standard (RPS) policies require utilities and load-serving entities (LSEs) to procure renewable energy generation. Utility procurement options may be a function of state policy and regulatory preferences, and in some cases, may be dictated by legislative authority. Utilities and LSEs commonly use competitive solicitations or bilateral contracting to procure renewable energy supply to meet RPS mandates. However, policymakers and regulators in several states are beginning to explore the use of alternatives, namely feed-in tariffs (FITs) and auctions to procure renewable energy supply. A FIT is a procurement mechanism that offers guaranteed grid access and guaranteed energy payment over a long-term contract to all developers within a set of eligible technologies, project sizes, and locations. FIT contract prices are typically set administratively based on location-specific cost criteria. Renewable energy auctions and competitive solicitation are bidding processes, in which developers submit project proposals. The difference between auctions and solicitations is that solicitations include a number of non-price criteria, while auctions select bids based on price alone (although potential bidders must meet a set of criteria in order to submit a bid).As compliance obligations expand, there may be an increasing emphasis on the effectiveness and efficiency of different procurement mechanisms and their best applications. This report does not make recommendations about what approaches (or combinations of approaches) LSEs and states should adopt to procure renewable energy. Rather, it evaluates each approach while assessing a number of important tradeoffs that affect how risks are assigned between developers, utilities, and utility customers.This report evaluates four procurement strategies (competitive solicitations, bilateral contracting, FITs, and auctions) against four main criteria: (1) pricing; (2) complexity and efficiency of the procurement process; (3) impacts on developers' access to markets; and (4) ability to complement utility decision-making processes. These criteria were chosen because they take into account the perspective of each group of stakeholders: ratepayers, regulators, utilities, investors, and developers. The primary conclusions of the report are summarized below. PricingCompetitive solicitations and auctions select for cost-effective projects. A policymaker seeking to promote least-cost generation may want to consider using one of those options. Additionally, in competitive wholesale electricity markets with regional transmission organizations, bilateral contracts may result in cost competitive contracts. However the bilateral contracting approach does not always result in the lowest cost contracts because there may not be other projects to compare against. FITs set prices paid administratively, and consequently may not result in least-cost projects. It can be challenging to design FITs that adjust to market realities and keep prices accurate over ti...

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Financial Bilateral Contract Negotiation in Wholesale Electricity Markets Using Nash Bargaining Theory

Cited by 57 publications

References 31 publications

Distributed flexibility characterization and resource allocation for multi-zone commercial buildings in the smart grid

Distributed flexibility characterization and resource allocation for multi-zone commercial buildings in the smart grid

A Nash Approach to Planning Merchant Transmission for Renewable Resource Integration

Procurement Options for New Renewable Electricity Supply

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