If you read the Power Markets 101 Series you might remember that there are three kinds of power generation: baseload, peaking, and intermittent. Renewables are intermittent, meaning we can’t control when they are generating power because they rely on the weather.
The independent system operators’ (ISOs) main goals are to provide efficient and reliable electricity. Renewable energy resources like wind and solar are efficient and cost-effective, but they're not guaranteed to be there when the system might need them, so they require back-up generation from baseload and peaking generators. For these reasons, ISOs, asset operators, real-time traders, and virtual traders all benefit from accurate renewable forecasting.
Let's explore:
Yes Energy provides powerful market data and industry-leading data visualization tools for all North American power markets. We know that renewable forecasts are critical to market analysis and we also know that our customers value having multiple forecasting sources right at their fingertips. That’s why we’ve chosen to partner with Vaisala. If you subscribe to Vaisala’s regional wind or solar forecasts and you subscribe to Yes Energy, then you can access Vaisala’s forecasts within Yes Energy’s products at no additional charge.
This allows you to put Vaisala’s regional renewable forecasts in context with other market data in Yes Energy like load, prices, weather data, etc. Now let’s take a look at what renewable forecasting is and why it matters.
Renewable forecasting is similar to weather forecasting. In fact, weather forecasting is a necessary component of renewable forecasting. Renewable forecasting predicts the amount of generation that will be available from renewable sources like wind and solar.
Renewable forecasts can incorporate weather, modeling, statistical algorithms, AI, climatology, and terrain – all fused and trained to the historic data from specific renewable energy facilities. Renewable forecasts are available at a general level (by region) or at a more specific site level.
As we mentioned above, renewable generation assets are an intermittent power source – wind turbines only produce power when there is wind and solar generation only produces power when the sun is out. If you read the Power Markets 101 Series, you may remember that electric supply must always meet demand exactly, otherwise, some of the components on the grid could be damaged. The power industry is unique because there is no viable way to store large quantities of power at the moment.
Battery technology will provide this storage in the future, and it is rapidly improving and coming online. However, until batteries become more prevalent and affordable it is impossible for balancing authorities and ISOs/RTOs to predominantly rely upon renewable generation.
While the intermittent nature of renewable assets is a pitfall, renewable assets are also comparatively affordable to operate because their fuel is essentially free. ISOs and RTOs operate using the system of economic dispatch, and as a result, renewables are often used when they are able to generate. Renewable forecasts are necessary so that renewable asset owners and operators know how much power they likely can generate, and they are also necessary for the ISO to plan accurately.
Without accurate renewable forecasting, the grid risks becoming severely imbalanced. Different generators have different ramping rates (meaning they are able to start generating power at different rates). If large quantities of power are expected to be generated by renewable assets and they are unable to, and there are not enough generators with fast ramp rates available, demand might significantly outweigh supply. Even if fast-ramping or peaking generators have enough capacity to meet the demand, this could still cause volatility in the markets and significant price spikes. As the prevalence of renewable generation continues to increase, accurate renewable forecasts will become more and more important.
Renewable forecasting is a relevant tool for almost anyone involved in power markets!
ISOs/RTOs and Balancing Authorities – ISOs/ RTOs and balancing authorities need accurate forecasting to operate the grid efficiently and reliably.
Renewable Operators – Renewable operators require reliable forecasting to predict their assets' performance and to make informed decisions about what to bid into the day-ahead and real-time markets.
Asset Operators – Renewable forecasting can also help asset operators learn what to expect in the day-ahead and real-time markets. If traditional asset operators know how their renewable competitors are likely to perform, they too can make informed decisions about what to bid into the day-ahead and real-time markets and when they should be ramping their assets up or down.
Financial Power Traders – Precise renewable forecasts can also help financial power traders to be more competitive. With accurate predictions, financial traders might see an inefficiency and an opportunity in the markets. Renewable forecasting also assists financial power traders in making informed and lucrative bids.
Image courtesy of Vaisala.
To learn more about our partnership with Vaisala, see our partners. To learn more about Yes Energy, request a demo, and we’ll be in touch!