Automated Peer-to-peer Negotiation for Energy Contract Settlements in Residential Cooperatives

TL;DR

This paper introduces an automated negotiation strategy for energy contracts among prosumers in residential cooperatives, improving system efficiency and fairness without central coordination.

Contribution

It presents a novel peer-to-peer negotiation approach considering prosumer heterogeneity and uncertainty, enhancing energy sharing efficiency and fairness.

Findings

Increases system efficiency measured by social welfare.

Enhances fairness as indicated by Nash social welfare.

Effective without central coordination.

Abstract

This paper presents an automated peer-to-peer negotiation strategy for settling energy contracts among prosumers in a Residential Energy Cooperative considering heterogeneity prosumer preferences. The heterogeneity arises from prosumers' evaluation of energy contracts through multiple societal and environmental criteria and the prosumers' private preferences over those criteria. The prosumers engage in bilateral negotiations with peers to mutually agree on periodical energy contracts/loans consisting of the energy volume to be exchanged at that period and the return time of the exchanged energy. The negotiating prosumers navigate through a common negotiation domain consisting of potential energy contracts and evaluate those contracts from their valuations on the entailed criteria against a utility function that is robust against generation and demand uncertainty. From the repeated interactions, a prosumer gradually learns about the compatibility of its peers in reaching energy contracts that are closer to Nash solutions. Empirical evaluation on real demand, generation and storage profiles -- in multiple system scales -- illustrates that the proposed negotiation based strategy can increase the system efficiency (measured by utilitarian social welfare) and fairness (measured by Nash social welfare) over a baseline strategy and an individual flexibility control strategy representing the status quo strategy. We thus elicit system benefits from peer-to-peer flexibility exchange already without any central coordination and market operator, providing a simple yet flexible and effective paradigm that complements existing markets.