Evolution of Transmission Rights in the European Electricity Market

In the European electricity market, transmission rights currently evolve from a physical to a financial nature. This requires a fundamental change in the underlying market design and the institutional setup. This paper applies the framework of congestion revenue rights (CRRs) to physical and financial transmission rights, which allows a comprehensive view on the issue, including financial regulation. Based on this framework, two options for transmission price hedging in an integrated European electricity market are discussed.