Multi-Agent Negotiation for Coalition Formation and Management in Electricity Markets

Negotiation is a fundamental tool for reaching understandings that allow each involved party to gain an advantage for themselves by the end of the process. In recent years, with the increasing of competitiveness in most sectors, negotiation procedures become present in practically all of them. One particular environment in which the competitiveness has been increasing exponentially is the electricity markets sector. This work is directed to the study of electricity markets’ participating entities interaction, namely in what concerns the formation, management and operation of aggregating entities—Virtual Power Players (VPPs). VPPs are responsible for managing coalitions of market players with small market negotiating influence, which take strategic advantage in entering such aggregations, to increase their negotiating power. This chapter presents a negotiation method to create and manage players’ coalitions. This approach is tested using MASCEM, using this simulator’s capability of providing an adequate framework to model and simulate VPPs. VPPs represent agents’ coalitions, capable of negotiating in the electricity market, and internally, with their members, combining and managing their individual characteristics and specific goals, with the objectives and strategy of the VPP itself.

Keywords: Adaptive Systems, Aggregators, ALBidS, Artificial Intelligence, Bid Definition, Coalitions, Context Awareness, Day- Ahead Electricity Market, Decision Making, Distributed Generation, Electricity Markets, Machine Learning, MASCEM, Multi-Agent Systems, Negotiation, Producers Classification, Scenario Analysis, Simulation, Strategic Behaviour, Virtual Power Players.