The Application Of Improved Transmission Rights In Risk Hedging Of Congestion Management

The innovation of electric power industry from vertical integrated monopoly to competed market creates a new developmental opportunity for electric power industry, while gives rise to many new problems and challenges such as transmission congestion. Transmission congestion is a very important issue in power market. The limitation of transmission resources gives rise to power transmission bottleneck of power market. It hampers the free competition of power market. If we really hope that the substance of market competition can be embodied and to improve efficiency of electric system, optimize resources, we must take efficient measures to manage transmission congestion. Transmission congestion can procedure extra congestion costs which cause indirectly nodal prices to fluctuate, and make the enforcement of power contracts signed insecure, so the management to insecure factors which congestion creates, that is the management to congestion risk. We must make it as an aspect of congestion management. Viewing from power network dispatcher, congestion management aims for adjusting generations and loads to relieve congestion and allocating rationally the congestion costs. Viewing from market participants, when the transmission resources is really limited, the aim of congestion management is to give them the means to avoid congestion risk, the rights to control their own damage and make them genuine market participants, because they are real congestion risk sufferers in practice.The paper formulizes most transmission congestion management methods presented recently. Particularly, transmission rights are introduced and analyzed in detail. Then, an improved financial transmission rights is presented for avoiding transmission congestion risk. A method of hedging congestion risk using the improved financial transmission rights is illuminated in detail. In the method, FTR of every line will be sold in forward market like electricity. The fee which traders buy FTR of those lines which weren't congested will all be deposited in the fund pool built by ISO, and the traders won't be compensated. But those traders who buy FTR of those congested lines will be compensated according to the principle presented in this paper to hedge congestion risk. The effectiveness and practicality of the model are verified by some numerical samples.