According to the Commission Regulation (EU) 2016/1719 of 26 September 2016 establishing a guideline on forward capacity allocation (FCA Regulation), Financial Transmission Rights Option is a sub-type of the broader category of Long Term Transmission Rights and means a right entitling its holder to receive a financial remuneration based on the day ahead allocation results between two bidding zones during a specified period of time in a specific direction.
The analogous definition of the Financial Transmission Right Option is used by Harmonised allocation rules for long‐term transmission rights as stipulated in the Annex to Decision of the Agency for the Cooperation of Energy Operators (ACER) No 03/2017 of 2 October 2017.
Financial Transmission Rights Options are regulated in Articles 33 and 35 of the FCA Regulation - see box.
Financial transmission rights — options
1. Holders of FTRs — options shall be entitled to obtain remuneration in accordance with Article 35.
2. The implementation of FTRs — options shall be subject to the application of day-ahead price coupling in accordance with Articles 38 to 50 of Regulation (EU) 2015/1222.
Principles for long-term transmission rights remuneration
1. The relevant TSOs performing the allocation of transmission rights on a bidding zone border through the single allocation platform shall remunerate the long-term transmission rights holders in case the price difference is positive in the direction of the long-term transmission rights.
2. The holders of FTRs — obligations shall remunerate the relevant TSOs through the single allocation platform allocating transmission rights on a bidding zone border in case the price difference is negative in the direction of the FTRs — obligations.
3. The remuneration of long-term transmission rights in paragraphs 1 and 2 shall comply with the following principles:
(a) where the cross-zonal capacity is allocated through implicit allocation or another method resulting from a fallback situation in the day-ahead time frame, the remuneration of long-term transmission rights shall be equal to the market spread;
(b) where the cross-zonal capacity is allocated through explicit auction in the day-ahead time frame, the remuneration of long-term transmission rights shall be equal to the clearing price of the daily auction.
4. In case allocation constraints on interconnections between bidding zones have been included in the day-ahead capacity allocation process in accordance with Article 23(3) of Regulation (EU) 2015/1222, they may be taken into account for the calculation of the remuneration of long-term transmission rights pursuant to paragraph 3.