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Enhancing bargaining power for energy communities in renewable power purchase agreements using Gaussian learning and fixed price bargaining

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  • Kandpal, Bakul
  • Backe, Stian
  • Crespo del Granado, Pedro

Abstract

Power purchase agreements aim to secure long-term contracts between sellers and buyers, particularly in renewable energy transactions. However, successful negotiations for a fixed long-term price and energy volume while ensuring maximum utility for stakeholders remains a significant challenge. This paper introduces a comprehensive model for negotiating 24/7 power purchase agreements, focusing on hourly pricing to address deficits and surpluses throughout each day of the contract timeline. The model incorporates demand flexibility through battery storage, settling on the strike price using Nash Bargaining theory and optimal management of energy consumption relative to market price fluctuations. A soft margin support vector machine classification model determines the buyer’s maximum acceptable price. Moreover, Gaussian process classification is employed to calculate a probabilistic, risk-adjusted strike price, enabling a data-driven approach to power purchase negotiations. The proposed model’s performance is demonstrated through a detailed case study of Norway, illustrating how demand flexibility can significantly lower long-term power purchase agreement contract prices. The analysis of yearly price trends indicates that incorporating flexibility resources in long-term energy contracts may lead to a reduction in strike prices by around 25%. Moreover, such flexibility enhances demand-generation matching, thereby increasing renewable energy transactions within such agreements.

Suggested Citation

  • Kandpal, Bakul & Backe, Stian & Crespo del Granado, Pedro, 2024. "Enhancing bargaining power for energy communities in renewable power purchase agreements using Gaussian learning and fixed price bargaining," Energy, Elsevier, vol. 309(C).
    • Handle: RePEc:eee:energy:v:309:y:2024:i:c:s0360544224027907
    DOI: 10.1016/j.energy.2024.133016
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    References listed on IDEAS

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