Concession Strategies for Negotiating Bilateral Contracts in Multi-agent Electricity Markets

Electricity markets are systems for effecting the purchase and sale of electricity using supply and demand to set energy prices. Market participants are commonly exposed to financial risks, particularly high price volatility. This article addresses the challenge of using software agents with negotiation competence to help manage the complexity of electricity markets. Specifically, it presents a model for software agents that handles two-party and multi-issue negotiation. Market participants equipped with the model are able to enter into forward contracts to protect themselves from volatility at times of peak demand and supply shortages.