A newly launched data service from MDA Information Systems, Inc. and Riverside Technology, inc. aims to enhance hydroelectric energy providers access to information and data about water supply and forecasts which could help them to better understand and then hedge their risks. The web-based subscription service known as the Weather and Hydrology Information Portal (WHIP) launched last week and offers 24/7 access to the Western Utilicast, a water supply forecast for the key hydro areas of the Pacific Northwest.
Access to weather information, particularly on likely future water supply and rainfall forecasts, is key to hydro energy providers who rely on a ready supply of water to help them create electricity. By gaining improved access to data the hydro energy companies can not only be better prepared for changes in supply or weather but can also look to hedge any shortfall in water supply which could impact their revenues.
A joint release from MDA Information Systems, Inc. and Riverside Technology, inc. says:
WHIP proves advantageous to the hydro energy market in many ways. Risk assessment is key for hydro energy providers who need the ability to protect themselves from the volatile and ever-changing nature of the weather and the environment. WHIP provides such protection by providing probabilistic water supply forecasts that indicate confidence in the forecast, giving providers a sense of the level of certainty behind the outlook. The system also offers water supply forecast alternatives based upon potential impacts from ENSO (El Nino Southern Oscillation) forecasts and current longer term climatology forecasts. Providers can use these potential alternative scenarios in the event that the current forecast doesn’t verify as expected. In addition, WHIP offers a comprehensive display showing where in the system the water currently resides and can indicate upcoming reservoir operation changes, and a snow-cover analysis that portends to potential runoff.
This sounds like a tool with very definite applications to weather hedging and perhaps it could support the creation and trading of weather derivatives for hydro energy providers. We’re sure the weather risk management market will be looking at this closely to see how it could enhance existing weather hedging offerings for the hydro sector. Water supply issues are a hot topic in the weather hedging sector and seen as one of the big opportunities for derivatives and other forms of hedging to assist in transferring the risk of water supply shortages.
“We are very excited about this opportunity,” said Larry Heitkemper, Vice President of Weather Services for MDA. “We are continuously striving to improve the way our clients view and receive this information, and WHIP does just that. This is a beneficial tool to those looking for detailed information concerning water supply issues.”
Riverside’s President and Chief Executive Officer Larry Brazil stated that the company is looking forward to extending its partnership with MDA. ’’It is important to provide information to our joint customers in a systematic format using today’s technology, which better prepares them to make decisions regarding water supply issues,” Brazil said.