Future smart grids will empower home owners to buy energy from real-time markets, coalesce into energy cooperatives, and sell energy they generate from their local renewable energy sources. Such interactions by large numbers of small prosumers (that both consume and produce) will engender potentially unpredictable fluctuations in energy prices which could be detrimental to all actors in the system. Hence, in this paper, we propose negotiation mechanisms to orchestrate such interactions as well as pricing mechanisms to help stabilise energy prices on multiple time scales. We then prove 1) that our solution guarantees that, while prices fluctuations can be constrained, 2) that it is individually rational for agents to join energy cooperatives and 3) that the negotiation mechanisms we employ result in pareto-optimal solutions.
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