Despite their widespread use in the renewable energy industry, using an 8760 to project financial performance can lead to significant errors in revenue models. In particular, revenue models that pair an 8760 with historical prices miss the impact of hourly renewable energy generation on hourly power prices. Because wind and solar plants are relatively inexpensive sources of generation, there tends to be a negative correlation between generation and power price in markets with high renewable penetration.
A recent white paper from REsurety, with contributions from Hannon Armstrong, a leading investor in climate solutions, offers an in-depth analysis into how using an “8760” energy model can lead to significant errors in revenue modeling — topping 30% in some high renewable penetration markets.
An “8760” (also known as a “typical meteorological year,” or “TMY”) is the average generation expected for a given wind or solar project for each of the 8,760 hours in a non-leap year. As implied by its “typical meteorological year” moniker, an 8760 contains average generation values reflecting typical seasonal and diurnal weather patterns. The problem with using an 8760 is that “typical” weather isn’t actually all that common, and high prices almost always coincide with extreme weather.
In today's episode, Nico discusses the findings with the whitepaper's author, Dr. Jennifer Newman, VP of Atmospheric Science at REsurety.
Check the links below to read the whitepaper for yourself, and to sign up for a webinar being offered Sept 28th by Ms Newman digging further into this topic.
Resources:
Connect with Jennifer Newman on LinkedIn
Follow REsurety, Inc. on LinkedIn and Twitter, and check out their website.
Catch her water cooler talk today, September 28th, 2021 at ACP's Resource and Project Energy Assessment Summit, from 1:15 to 2:15 pm ET, in which she'll drill down into "shape" and 8760s with all their shortcomings. Registration for that is here.
Articles and White paper mentioned:
WHITE PAPER: Friends Don’t Let Friends Use 8760s
Research Shows We Can Do a Better Job of Estimating Wind and Solar Revenue
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