Simulating Participants' Behaviour in New Zealand Financial Transmission Rights Market

Download or read book Simulating Participants' Behaviour in New Zealand Financial Transmission Rights Market written by Michael Leon and published by . This book was released on 2014 with total page 101 pages. Available in PDF, EPUB and Kindle. Book excerpt: This work offers a model that can be used to generate Financial Transmission Right (FTR) bids in the New Zealand electricity market. FTRs are a type of contract in the electricity market that a participant can purchase to hedge locational price risk. The first New Zealand FTR auction occurred in June 2013. Our aim with this work is to produce an implementable model that market participants can use to generate FTR bids. Using CVaR to encapsulate the risk aversion of participants, our model can be tailored for specific gentailers in New Zealand, depending on their generation assets as well as their retail obligations. The backbone of this work focuses on obligation FTRs, but an extension on option FTRs is also included. Using this model, we have simulated the bids for five major gentailers in New Zealand. These bids were then input into the FTR auction to determine how much FTR volume is allocated to each of the particpants, as well as the price of FTRs. In our main sce-nario month, July, we obtained a clearing price of $1.80/MWh for obligation FTRs from Otahuhu to Benmore. The importance of revenue adequacy in an FTR market has been confirmed by all the major gentailers. This has been included in our bid model by using scale factors on FTR payments.