A strategy for FTR bidding in deregulated electricity markets

This paper presents a strategy to evaluate the financial transmission rights (FTRs) bids of the electricity market participants using locational marginal price (LMP) technique and serve as an important instrument for hedging the risk of congestion charges. In deregulated electricity markets, FTRs are allocated through the process of auction to reduce the losses in congestion management by making bids for different transmission lines. The main objective of an auction is to maximize revenues from FTRs. A generalized mathematical model of FTR auction for maximising revenues and availability to all entrepreneurs on non-discriminatory basis to keep the system within limits is developed. The FTRs and LMP of 14 bus system are calculated in this paper using the software program developed in MATLAB determines the congestion credits. FTR congestion credits are calculated based on average locational marginal price. Introducing a hybrid scheme for congestion management and FTRs, facilitates the new restructured power system to deal with congestion charges and credits and helps in presenting a new approach for transmission pricing. A numerical example of 14 bus system has been illustrated for analysing the results and supports the approach.