Financial Transmission Rights In Changing Power Networks

Many restructured power markets rely on Financial Transmission Rights (FTRs). FTRs are financial contracts that entitle the holder to a stream of revenues (or charges) based on the day-ahead hourly congestion price difference across an FTR related energy path. Holders obtain FTRs through an auction mechanism relying on the solution of a specially formulated OPF problem. FTR holders then receive or make payments based on the outcome of Day Ahead (DA) energy market. Known FTR properties (revenue adequacy) [1] guarantee that if the auction OPF and the DA market have the same network topology, congestion rent collected in the DA market will be sufficient to pay all FTR holders. DA market topology almost always deviates from the auction topology. This may create underfunding problems. We propose a solution to topology-driven underfunding using Topology Reconfiguration Rights (TRRs) financial transactions corresponding to topology changes. Combinations of FTRs and TRRs guarantee revenue adequacy.