The evolution from the physical transmission rights (PTRs) to financial transmission rights (FTRs) in the form of options becomes a dominant feature the European cross-border electricity market.
This inevitably creates opportunities and further supports new forms and models of electricity trading, nevertheless, gives rise to new risks, which market participant must mitigate on its own.
Among these risks is the one involving potential partial clearing of the day-ahead market.
In such case the holders of FTR Options would be compensated in at the day-ahead market spread, which is the difference between the day-ahead price of the neighbouring bidding zone and the day-ahead price of the not cleared bidding zone (currently capped at 3,000€/MWh), while being exposed to the imbalance settlement price in that zone, which can be capped at a price higher than 3,000€/MWh.