A Negotiation Model for Bilateral Contracting Considering Perceived Value

In an open electricity market environment, power generators and large users participating in bilateral transactions have to use limited information to estimate each other’s reservation prices, to help themselves adjust and improve their offer strategies, and to improve the probability of successful transactions. A reservation price pricing method combining perceived value and cost is proposed, based on which a bilateral transaction negotiation model is constructed. We estimate the actual utility of power consumers (power generators) through the expected use value of the power generators (power consumers) and determine the other party’s reservation price by combining the cost of power generation and willingness to pay. We describe the participants’ offer strategies through concession factors and examine the dynamic iterative process of participants’ negotiation. The analyses of the algorithms show that the method can be applied to one-to-many and many-to-many transaction matching, but the transaction steps will be more complicated when the offer gap between the matching parties is too large.