HydroForecast can earn hydropower operators up to 6.4% in additional revenue, according to a peer-reviewed study from Idaho National Laboratory. Published (currently as a pre-print) in Energy Reports, Hydropower flexibility valuation tool for flow requirement evaluation quantified the effects of different operating regimes on earnings.
The study is written by a collaborative of authors from the Department of Energy’s national laboratories - Idaho, Oak Ridge, and Pacific Northwest National Laboratory, as well the California Department of Fish and Wildlife and the non-profit group American Whitewater. The paper’s main focus is “how to make more informed decisions to weigh the cost of specific [environmental] flow requirements in the context of the overall license requirements,” and it evaluates the revenue impacts of changing various flow constraints, as well as improved forecasting’s potential to increase earnings.
HydroForecast’s Financial Impact
The paper sums its findings related to forecasting neatly:
Inflow forecasts are necessary for hydropower operators and water managers to make dispatch decisions that account for future conditions. Therefore, by having improved forecasts, it is possible that the decision makers can better satisfy both power market and environmental objectives…Of the two potential forecasts tried, HydroForecast (Kratzert et al., 2019) results in higher revenue up to 6.4% compared to “persistence forecast” depending on the month.
The example power plant earned over 75% of its annual revenue during the spring freshet in the first five months of the year. Over that period HydroForecast increased revenue by 3% compared to the ‘persistence’ forecast, or persisting the latest observation into the future. A perfect forecast, or one with no error and complete foresight, would only have earned an additional 0.9% beyond HydroForecast. The month with the largest difference in earnings resulted in 6.4% higher revenue using HydroForecast.
Summary of Methods
The study uses a two-stage optimization method to maximize revenue in the day-ahead and real-time markets for a hypothetical hydropower plant in California. The plant is a 18 MW asset with less than a day of storage that participates in the CAISO market. The model subjects the plant to “operational limits, regulatory flow and ramping requirements, and uncertainties associated with water availability and market prices.” Within those constraints, the model seeks to bid the optimal amount of energy into the day-ahead market, with the remaining production settling in the real-time market.
The main takeaway for hydropower operators considering investing in an improved forecasting system is that HydroForecast can increase earnings by roughly 3-6% over the course of a year. Beyond that, better forecasts can enable operators to improve environmental outcomes at their asset without sacrificing revenue. These joint findings are encouraging for operators seeking to navigate a rapidly changing energy and environmental landscape, as new electricity markets emerge and as climate change means weather and water availability are increasingly volatile.
Curious what 3-6% more revenue would look like for your hydropower assets? Check out our HydroForecast ROI calculator here.