Forecast for a brighter future

Emily Wallace explores the impact of weather on energy demand, generation and trading

Generating and supplying energy – and doing so in an efficient manner – is an incredibly complicated business:

Accurately predicting supply and demand is something that energy generators, distributers, suppliers and traders are focusing on more than ever in order to achieve the best operational performance and, ultimately, profits.

One of the key influencing factors on supply and demand is the weather. Just a one degree change in temperature can lead to a five per cent increase in gas demand for some suppliers.

Therefore, understanding meteorological factors is crucial in determining the right amount of energy required to meet customer demand. Buy and supply too much and business performance will not be efficient. Too little and the lights go out.

Even for businesses that generate their own energy, peaks in demand mean they have to source additional energy from other suppliers. It is therefore vital for energy companies to plan for when they need to do this – and just as importantly, when they don’t.

Essentially, everyone wants an accurate forecast just before everyone else – so businesses need to ensure they have the best tools at their disposal to access accurate predictions and not be the last to the party, paying more for the energy.

Emily Wallace will speak at Utility Week’s Demand Response & Future Networks Conference: 17 March, Birmingham

The weather is just as important when it comes to energy generation. There is set to be a continued increase in renewable energy generation (last year alone £5.2 billion worth of construction contracts for 1,095 renewable energy projects were awarded) and there is an obvious connection between the weather and renewable power generation.

Those generating renewable energy need to be able to make accurate long term yield predictions in order to successfully plan for the potential long-term success of a site. Products such the Met Office’s ‘Intelligent’ Virtual Met Mast™ can help here and offer major advantages to European wind sector.  The data and resultant reports can then be used to support site search, selection and development activities across a range of wind energy projects.

This growth in renewable energy generation also poses new challenges for the DNOs. National Grid  are already using weather information to balance the whole UK grid and keep the lights on,however the recent, rapid growth in energy generated from renewable sources means that DNOs  may need to start using weather forecasts to load balance to manage the renewable generation coming on to their local networks . By doing so, it could allow more renewable assets to connect to their network without delays and expensive construction works – by effectively managing their assets in peak supply situations.

Climate Impacts

Some of the larger companies we work with at the Met Office look far into the future to help ensure they can make effective, long-term plans to offer the best prices to their customers. Historical data plays a key role here. Typically weather patterns taken from datasets covering a long period will be analysed in order to help inform business decisions for the next few years. But there is another important factor at play – climate change.

The Met Office, using its world-leading scientists and industry experts are able to project historical relationships between weather and business impacts into the future and make relevant interpretations in order to provide advice and information which large energy companies can use to help them mitigate against the impacts of climate change on both their assets and potential generation and distribution in the future.

In order to stay ahead of the game, the key for generators, traders and suppliers is considering future weather and climate as far in advance as possible to help hedge risks. Having foresight on the most likely weather scenarios helps inform traders in terms of what is going to impact energy trading throughout Europe. In a nutshell, understanding the certainty of a forecast is vital to trading weather-impacted stocks such as crude, natural gas and electricity.

Understanding the weather helps ensure generation stays on track with demand, and allows energy companies to plan for the future with as much certainly as possible. Of course this ultimately benefits consumers – you and me – by keeping our energy bills down