Abstract
With the implementation of electricity markets, the provision of transmission rights has become a natural extension. Transmission rights can be of the flowgate or financial types and have been developed to manage the risk posed by volatile congestion costs. A financial transmission right (FTR) is an instrument to hedge source-to-sink congestion and entitles its holder the right – or obligation- to collect a payment when congestion arises in the energy market. The basic definition of an FTR consists of a source and a sink node that identify the point-to-point direction of the right, a MW award that is constant for the full life term of the instrument, a time of use for which the instrument is settled and a life term which identifies the period over which the instrument is valid. Although the definition is point-to-point, FTRs are not necessarily limited to be defined between individual nodes, load zones or trading hubs are aggregated nodes widely used for FTRs.
The ideas expressed in this chapter are solely those of the author and do not represent any official position from the California ISO.
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Notes
- 1.
The Pennsylvania, New Jersey, Maryland (PJM) market offers both obligation and option types of FTRs.
- 2.
The n-1 contingency is usually the most common security constraint used in the operation of a power systems and accounts for the loss of a single generator or transmission element in the system.
- 3.
P.u. stands for per unit and is used in power systems studies to handle calculations with different voltage levels.
- 4.
Operating Transfer Capability (OTC) refers to the nominal values of transmission constraints. Once any reserved capacity is discounted, one may refer to the Available Transfer Capacibility (ATC) which is the transmission capacity that is made available to the market.
- 5.
In the California ISO markets, FTRs are named Congestion Revenue Rights (CRRs).
- 6.
Branch groups, transmission corridors or inter-tie constraints are just different types of transmission constraints used in the California ISO markets. Such elements are usually identified with acronyms or names related to the area of their physical location.
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Alderete, G.B. (2013). FTRs and Revenue Adequacy. In: Rosellón, J., Kristiansen, T. (eds) Financial Transmission Rights. Lecture Notes in Energy, vol 7. Springer, London. https://doi.org/10.1007/978-1-4471-4787-9_10
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DOI: https://doi.org/10.1007/978-1-4471-4787-9_10
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