Challenges of Obtaining Financial Transmission Rights for Wind Projects

Sandeep Nimmagadda, Mark A. Harral, and Stephen B. Bayne


Financial transmission rights, regional transmission organisations, locational marginal pricing


Financial transmission right (FTR) is a financial tool to hedge the congestion component of the locational marginal price (LMP) across two different nodes in a transmission system. FTR is usually purchased by a firm transmission customer and is a financial equivalent of the physical power delivered across the two nodes. In the case of wind farms, the generator might not produce energy when the price difference due to congestion exists. This concept of FTR which is primarily designed for conventional generation and loads might expose the wind farms to a negative cash flow which is a potential issue with the intermittent generations such as wind [1]. In this paper, the drawbacks of the existing FTRs and factors influencing the FTR investment for a wind project are analyzed. Finally, the paper discusses the concept of wind FTRs which provides a potential solution to overcome the drawbacks of existing FTRs and thereby reduce the risk of negative cash flow for wind projects.

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