Blocking Strategies against Financial Transmission Right´s Market Power

A financial transmission right (FTR) give the holder the right to collect the congestion rent between two nodes, i.e. the difference in price between the two nodes multiplied by the number of contracts held. These contracts are intended to provide a hedging mechanism for market participants, thus reducing risk and inspiring more confidence in today´s deregulated wholesale electricity markets. This paper presents a scenario to demonstrate how FTRs can confer market power on an otherwise powerless market player and then shows how adaptive agents can learn to block FTR´s market power in a simulated power market.