  Financial transmission right (FTR) is an important tool and an especially
feature for stopping congestion charges in restructured electricity markets.
Participants in the transmission market as players are assumed to be a
generation company (Gencos) which also take part in an energy market and able
to buy their require FTRs. In this regard, there are two types of FTR:
obligation or option. There are three main questions which immediately arise
for each player who is placed in the market. First, which type of FTR is the
best choice second, how much power is needed to generate by each player and
third, how bid prices should be offered. Deciding on these trade-offs is
difficult and requires definition of special matrices to measure risk in each
possible condition in the transmission market. These matrices include:
possibility of flow direction alteration, probable forward and reverse power
flow on each line, maximum and minimum offering FTRs and the worst condition of
load variation which influence on each players decision. Based on these
matrices, players try to maximize their expected payoffs by taking into account
the associated risks. Supposing these matrices are known to respective players,
the FTR bidding problem is modeled as a bi-level optimization based on the Nash
equilibrium game theory with the upper sub-problem representing player profit
maximization and the lower sub-problem representing the optimal solution to the
market clearing. An eight-bus system with six players is simulated to verify
the proposed method and the obtained results are illustrated the complex
interaction between FTR obligation and FTR option bidding strategies.
Furthermore, the results are demonstrated to be consistent between the impacts
of FTR type, forecast bid offer of the other players and players preferred risk
levels on FTR bidding strategies.
