Valuing risk reduction for renewables and DSM.
Gary Dorris (gdorris@ascendanalytics.com) is president and Mark Germer (mgermer@ascendanalytics.com) is senior advisor of Ascend Analytics.
Resource planners are faced with complex choices for developing cost-effective and robust energy supply portfolios. These choices are complicated by uncertainties inherent in future fuel and emissions costs. In the summer of 2008, retail energy providers with supply primarily from wind generation had a substantial cost advantage over gas-fired generation. In the summer of 2009, though, gas prices plummeted in the wake of the recession. Reversing the previous trend, this shift causes wind generation to appear more costly relative to gas-fired generation.
Dramatic swings in market prices are inevitable in today’s competitive energy markets. Recognizing that consumers of energy are risk averse, there exists a real and measurable value to resource choices that reduce the uncertainty in energy supply costs. By applying advanced analytics that achieve higher levels of prudent portfolio management, the value of the risk avoided through integration of renewable energy sources and demand-side management (DSM) can be directly quantified.