The term congestion revenue rights are an important part of the transmission and distribution system. Let’s get into our congestion revenue rights (CRR) definition to help you learn more about energy markets.
What Are Congestion Revenue Rights (CRR)?
Congestion Revenue Rights can be procured for a megawatt number, from a point of injection into the grid and to a point of withdrawal from the grid. It doesn’t matter how the power generation is dispatched, the owner of a CRR would pay or get paid 100 megawatts times the locational marginal price (LMP) difference between the nodal injection and the nodal withdrawal settlement point.
Think of a congestion revenue right as a financial instrument. It solely serves as a settlement contract within the grid system to compensate for the tollway that electric supply operates in. CRRs are usually defined on a quarterly basis during a calendar year. Long-term CRRs extend nine years after an annual term for a total of ten years altogether.
Types of CRRs
There are a couple of CRRs types that you should know.
Entitles the ultimate revenue right holder to a payment if the congestion is in the same direction of the CRR. Then, it requires a charge if congestion is in the opposite direction.
Entitles the revenue right holder to a CRR payment if the congestion is in the same direction of the CRR, but requires no payment if it is in the opposite direction
There are limited to no available CRR options to project owners of a transmission facility that do not elect a form of regulatory cost recovery.
You can find CRRs in most ISO networks, including the major ones of PJM, CAISO and ERCOT.
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