Managing exposure to weather and climate uncertainty and extremes
Many critical industries are increasingly cognizant of their vulnerability to extreme weather, which can cause physical damages to sensitive equipment and shocks in supply and demand. For example, in electric power systems extreme temperatures (heat waves, cold snaps) are associated with spikes in electricity demand. Hydrologic extremes (especially drought) can also disrupt power system operations by reducing hydropower production and disrupting operations at steam-based thermal power plants (nuclear, coal and even natural gas) that require large quantities of cooling water. Flooding and high winds from extreme storms can damage low and high voltage transmission and sensitive equipment at electrical substations.
In rapidly decarbonizing grids, a new challenge– managing variability and uncertainty in wind and solar power production– is also quickly emerging. System operators face critical challenges in long term planning and short term operations related to the large scale integration of variable renewable energy. We will have to build and manage power systems of the future that can absorb extremes on both ends of the spectrum — scarcity and abundance.
Our group is a leader in weather and climate change vulnerability assessment to inform engineering design and risk management. We use large computational modeling experiments to quantify the importance of different sources of weather and climate caused stress on system outcomes (physical system reliability, environmental performance, economic impacts, and equity). In addition to the electric power sector, our work focuses on the natural gas industry as well as liquid biofuel supply chains.
Denaro, S., Cuppari, R., Kern, J., Su, Y., Characklis, G. (2022). “Assessing the Bonneville Power Administration’s Financial Vulnerability to Hydrologic Variability“. Journal of Water Resources Planning and Management. Vol. 148, Issue 10. doi: 10.1061/(ASCE)WR.1943-5452.0001590
Akdemir, K., Kern, J.D., Lamontagne, J. (2022). “Assessing risks for New England’s wholesale electricity market from wind power losses during extreme winter storms“. Energy. Vol. 251. https://doi.org/10.1016/j.energy.2022.123886
Wessel, J., Kern, J.D., Voisin, N., Oikonomou, K., Haas, J. (2022). “Technology pathways could help drive the U.S. West Coast grid’s exposure to hydrometeorological uncertainty.” Earth’s Future. Volume 10, Issue 1. https://doi.org/10.1029/2021EF002187
Su, Y., Kern, J.D, Characklis, G. (2022). “The Effects of Retail Load Defection on a Major Electric Utility’s Exposure to Weather Risk” Journal of Water Resources Planning and Management. Volume 148, Issue 3.
Hill, J., Kern, J.D, Rupp, D., Voisin, N., Characklis, G. (2021). “The Effects of Climate Change on Interregional Electricity Market Dynamics on the U.S. West Coast” Earth’s Future. Volume 9, Issue 12. https://doi.org/10.1029/2021EF002400
Lucy, Z., Kern, J. (2021). “Analysis of fixed volume swaps for hedging financial risk at large-scale wind projects.” Energy Economics. 103, 105603.
Kleiman, R., Characklis, G., Kern, J., Gerlach, R. (2021). “Characterizing weather-related biophysical and financial risks in algal biofuel production“. Applied Energy. Vol. 294.
Boyle, C., Haas, J., Kern, J. (2021). “Development of an irradiance-based weather derivative to hedge cloud risk for solar energy systems“. Renewable Energy. Vol. 164, p. 1230-1243.
Su, Y., Kern, J.D., Reed, P., Characklis, G. (2020). “Compound Hydrometeorological Extremes Across Multiple Timescales Drive Volatility in California Electricity Market Prices and Emissions”. Applied Energy.
Kern, J.D., Su, Y., Hill, J. (2020). “A retrospective study of the 2012-2016 California drought and its impacts on the power sector.” Environmental Research Letters. 15 094008
Su, Y., Kern, J., Denaro, S., Hill, J., Reed, P., Sun, Y., Cohen, J., Characklis, G. (2020). “An open source model for quantifying risks in bulk electric power systems from spatially and temporally correlated hydrometeorological processes” Environmental Modelling and Software. Vol. 126.
Kern, J.D., Characklis, G. (2017). “Evaluating the Financial Vulnerability of a Major Electric Utility in the Southeastern U.S. to Drought under Climate Uncertainty and an Evolving Generation Mix.” Environmental Science and Technology. Vol. 55(15), pp. 8815-8823.
Su, Y., Kern, J.D., Characklis, G. (2017). “The Impact of Wind Energy Growth and Hydrological Uncertainty on Financial Losses from Generation Oversupply in Hydropower Dominated Systems.” Applied Energy. Vol. 194, pp. 172-183.
Kern, J.D., Characklis, G.W., Foster, B. (2015). “Natural Gas Price Uncertainty and the Cost Effectiveness of Hedging Against Low Hydropower Revenues Caused by Drought.” Water Resources Research. Vol. 51, No. 4, pp. 2412-2427.
Foster, B., Kern, J.D., Characklis, G.W. (2015). “Mitigating Hydrologic Financial Risk in Hydropower Generation Using Index-Based Financial Instruments.” Water Resources and Economics. Vol. 10, pp. 45-67.