Bilateral Contracts for Electricity Delivery: Scheduling and Arrangement

Bilateral contracts are widely applied in competitive electricity markets. Contract parties should distribute electricity deliveries by time intervals during a contract period in an optimal way to get the highest profit and to elaborate a strategy of participating in the spot and retail markets. The statement of the stochastic optimization problems is presented for delivery scheduling. Game theory application is considered for the contract arrangement. A criterion for Nash point determination is proposed. A compromise in determination of the delivery strategy consists in equality of relative concessions of the contract parties. Numerical examples illustrate the properties of optimization problems for contract scheduling and procedures for contract value and contract volume determination.