  There has recently been growing interest in the development of financial
storage rights for energy storage systems as instruments akin to their
transmission counterparts as a means to not only distribute congestion rents,
but also to mitigate price risks, and even to signal and finance investments in
light of increasing penetration of renewable generation and downward pressures
on market clearing prices. This work presents a discussion on the applicability
of such instruments to hydroelectric power plants as a mechanism to decouple
ownership and operation of reservoirs, especially those with small regulating
capacity, aiming to improve their valuation and investment risk management in
electricity markets. The resulting model takes into consideration reasonable
assumptions regarding their nonlinear physics and short-term operation
properties, extending the applicability of a strong theoretical framework
recently proposed in the literature to a large share of the energy mix.
