I spotted an interesting press release on the website of GE Energy today which I thought relevant to our readership. It discusses a partnership between GE Energy and WSI Corporation which will offer more accurate forecasting tools to owners and operators of wind farms and their transmission or distribution partners. Technology will be developed to collect real-time turbine and wind data which will be incorporated into proprietary forecasting models. The result it is hoped will be a source of more accurate forecasts and operational guidance data for the wind power industry.
Having an accurate source of real-time forecasting (and historical data) can lead to many advancements within the wind power industry. The kinds of positive things which could result from this technology include real-time data on turbine performance which would enable manufacturers to develop more efficient turbines and improved power production planning. Of course, it would be interesting to us to see such a partnership help further the cause of wind power derivatives and hedging techniques.
For a few years now there has been discussion amongst the scientific and financial communities of the possibility of a market in wind power derivatives. Wind speed is directly correlated to the power output of wind farms and as such it would seem a natural evolution for this industry. Some deals are struck every year but the uptake on this area of weather derivatives has been slow despite the correlation. You would think it would be easy to sell a wind farm operator a contract which pays them in years when wind speed is low. Equally you would think that the company who owns the power transmission lines would be interested too. Could further advancements in measuring and forecasting the wind specifically for wind farms be just the thing a market in it’s infancy such as this needs? The wind power industry is growing and once it moves into the developing world as generation becomes cheaper we expect to see this market grow more rapidly. It’s widely believed that wind power derivatives could become almost as popular as normal temperature based weather derivatives are to the power generation industry.
Read the full press release from GE Energy here.