Adaptive Introduction and Effect Analysis of Financial Transmission Rights in China's Electricity Market

The competitive outcomes of China's electricity market reform have gradually become apparent, but the toolbox for market risk mitigation, particularly financial transmission rights, remains underdeveloped. On one hand, generation side entities urgently require financial transmission rights to hedge against congestion risks. On the other hand, under the unified settlement point pricing mechanism, the design of financial transmission rights needs to be scientifically structured. This paper proposes a mechanism for constructing financial transmission rights with the unified settlement point as the endpoint, based on the unified settlement point pricing mechanism in China's typical electricity spot market, focusing on the revenue structure and risk exposure of generators. The theoretical effectiveness of this mechanism is demonstrated. Furthermore, a power market clearing model based on network topology is employed to enhance the realism and reliability of market simulations. Additionally, the risk-hedging effectiveness of financial transmission rights is validated using provincial grid data. Finally, policy recommendations for the introduction of financial transmission rights are derived.