The importance and accuracy of wind power forecasts

Due to the global crisis o f climate change many countries throughout the world are installing the renewable energy o f wind power into their electricity system. Wind energy causes complications when it is being integrated into the electricity system due its intermittent nature. Additionally winds intennittency can result in penalties being enforced due to the deregulation in the electricity market. Wind power forecasting can play a pivotal role to ease the integration o f wind energy. Wind power forecasts at 24 and 48 hours ahead of time are deemed the most crucial for determining an appropriate balance on the power system. In the electricity market wind power forecasts can also assist market participants in terms o f applying a suitable bidding strategy, unit commitment or have an impact on the value o f the spot price. For these reasons this study investigates the importance o f wind power forecasts for such players as the Transmission System Operators (TSOs) and Independent Power Producers (IPPs). Investigation in this study is also conducted into the impacts that wind power forecasts can have on the electricity market in relation to bidding strategies, spot price and unit commitment by examining various case studies. The results o f these case studies portray a clear and insightful indication o f the significance o f availing from the information available from wind power forecasts. The accuracy o f a particular wind power forecast is also explored. Data from a wind power forecast is examined in the circumstances o f both 24 and 48 hour forecasts. The accuracy o f the wind power forecasts are displayed through a variety o f statistical approaches. The results o f the investigation can assist market participants taking part in the electricity pool and also provides a platform that can be applied to any forecast when attempting to define its accuracy. This study contributes significantly to the knowledge in the area o f wind power forecasts by explaining the importance o f wind power forecasting within the energy sector. It innovativeness and uniqueness lies in determining the accuracy o f a particular wind power forecast that was previously unknown.

The concept of risk management in the renewable sector.

This study explores the perception of risk and the level of risk management implementation in the renewable sector. Risk management is emerging as a key issue due to the loss of confidence amongst banks, causing the attainment of financing to be difficult over the next few years. To attract financing, there is a fundamental requirement to manage risk in a way that minimizes the probability of a negative financial impact on the project. Miller and Lessard (2001) argue that successful projects are not selected but shaped with risk resolution in mind. Rather than evaluating projects at the outset based on projections of the full set of benefits, costs and risks over their lifetime, successful developers start with project ideas that have the potential of becoming viable. Therefore, this study bridges the gap that exists within the renewable sector in relation to risk management literature. This study succeeds through a detailed comparative case study analysis where two developers and two financiers were questioned through qualitative semi-structured interviews on the concept of risk management and its level implementation within the industry. It is believed that the growth in financed renewable energy projects depends on the adequate design and implementation of risk management to mitigate inherent project risks. However, this study revealed that are certain types of developers in existence within the renewable sector, which underestimate the magnitude of risk and view the development of projects as a ‘money racket’. Therefore, it can be concluded that perception of risk will also differ, causing risk and uncertainty to vary from project to project, resulting in investment reluctance to be associated with certain projects. The study originality lies in how it demonstrates to developers the concept of risk management, outlining the simplicity and benefits of implementing it in project development. Finally, this study contributes to the knowledge by enhancing the awareness and understanding of the presence and nature of risk in a RE project environment.