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Electricity power industries around the world are undergoing restructuring. Many challenging issues have arisen under the newly deregulated competitive electric power market. The retail competition in electric power market has been introduced in Japan since March 2000. Although the liberalization is limited in a part of the retail power market having about 30% share of total electricity demand, the liberalized customers is now under competitive circumstance among the Utilities and new entrants. This paper proposes a negotiation model to determine electricity trade contracts between a utility, PPS and eligible customers. In addition, the negotiation price and the investment capacity are decided by negotiation model. The proposed approach has been illustrated with a numerical example to verify its effectiveness.