Renewable Energy Credit

(REC) Price Forecast

UNCERTAINTY IN THE ELECTRICAL GRID
• In today's electrical grid, as the integration of renewable energy sources (RES)
in the grid increases, the uncertainty in the available generation also rises. In
particular, the larger the share of RES in the grid, the more dependent is the
electricity generation on weather conditions, and in turn, the more
unpredictable electricity generation becomes. This uncertainty also affects the
demand side as electricity consumption is also weather-dependent and every
kWh produced must be consumed somewhere.

• In this context, in order to cope with the uncertainty in the production and
demand of electricity, forecasting has become a key component in several
applications, e.g. reserve activation, electricity trading, operational planning,
switching sources, programming backup, short-term power trading, peak load
matching, scheduling of power systems, congestion management, etc.
What is a REC and why is it needed?
• RECs are the market instrument used to represent the renewable energy
attributes associated with renewable electricity generation – one REC
represents the generation of one MWh of qualifying renewable electricity.
Utilities purchase and surrender RECs to demonstrate compliance with RPS
requirements, which is verified by regulators.
• Interest in renewable energy has increased worldwide in response to concerns
about greenhouse gas (GHG) emissions, other environmental issues such as
nitrogen oxides, particulate matter and other regional air emissions, energy
security and economic development.
• Many countries have established mandatory Renewable Portfolio Standards
(RPS) to require certain electricity utilities to include renewable energy in
their energy supply mix. These requirements have created a market for the
clean or renewable energy attributes associated with renewable energy
generation.
WHAT DO WE NEED TO FORECAST?
I) ELECTRICITY DEMAND
From the point of view of a transmission system operator, knowing the demand of electricity is
paramount for scheduling power systems, purchasing reserves, congestion management, and ensuring
that cost are minimized while the demand of electricity is ensured (even though failures in the system
might happen). Similarly, utility companies might also benefit from electricity demand forecasting in
several ways, e.g. operational planning.
II) ELECTRICITY PRICES
In recent years, together with the increasing integration of RES, the volatility of electricity prices has also
surged. In this context, accurate forecasting of electricity prices is of paramount importance to utility
companies for successfully trading electricity, scheduling and planning processes, and programming
backups.
III) SOLAR/WIND GENERATION
Among the RES that are weather dependent and in turn uncertain, wind and solar sources represent the
largest share in the energy mix. In particular, wind and solar-based generation respectively represent the
second and third largest share of RES, only below hydro power which is much less weather-dependent
and less uncertain.
Electricity Demand
trends in India
• During the fiscal year 2017-18, the utility energy availability was
1,205 billion KWh with a short fall of requirement by 8 billion
KWh (-0.7%) against 1230 billion KWh anticipated. The peak load
met was 160,752 MW with a short fall of requirement by 3,314
MW (-2%) against 169,130 MW anticipated.
• Nearly 0.28% of households (0.6 million) have no access to
electricity in India. The International Energy Agency estimates
India will add between 600 GW to 1,200 GW of additional new
power generation capacity before 2050.
• India's renewable energy sector is amongst the world's most
active players in renewable energy use, especially solar and wind
electricity generation. As of 31 March 2018, India had grid
connected installed capacity of about 69.02 GW non-
conventional renewable technologies-based electricity capacity
and conventional renewable power or major hydroelectric
power capacity of 45.29 MW. The total renewable power
generation capacity as of 31 March 2018 was 114.31 GW.
 Wind Power Generation
Wind power generation depends on many characteristics and the power output
from a wind turbine can be calculated using the Equation 1. Here A stands for
area that is covered by the wind turbine blades (a circle with radius r), ρ is for
air density, V is wind speed and Cp for efficiency factor usually imposed by the
manufacturer.
P =AρV 3Cp2
In this equation wind speed is a significant factor as the power output is proportional
to the wind speed. It also observed that there is a cutoff speed where
the power output is steady after that speed (so as to ensure the safety of the
turbine). Other factors such as humidity and temperature also affect the density
of the air, which in turn affects the power generation. Thus, it is necessary
to forecast these factors and ultimately the final power output in a wind farm.
Fig: Overview of power grid with integrated renewable sources and its usage of machine learning
techniques in different steps
 FORECASTING WIND AND SOLAR GENERATION:
IMPROVING SYSTEM OPERATIONS
Forecasting is a crucial and costeffective tool for integrating variable renewable
energy (VRE) resources such as wind and solar into power systems.
FORECASTING METHODS:
In general, forecasting methods fall into two categories.
• Physical methods input weather data (e.g., temperature, pressure, surface
roughness, and obstacles) into numerical weather prediction (NWP) models to
create terrain- specific weather conditions, which can then be converted to energy
production.
• Statistical methods use historic and real-time generation data to statistically correct
results derived from NWP models.
• Persistence forecasting is a simple statistical method that assumes current
generation levels will remain unchanged in the very near future. Persistence
forecasts are often used as a benchmark or reference model to evaluate more
advanced methods
 References
1. Forecasting in the electrical grid
2. REC forecast and Pricing
3. Electricity Sector in India
4. https://ieeexplore.ieee.org/document/7972173
5. http://www.aungz.com/PDF/88170082.pdf
6. https://www.nrel.gov/docs/fy16osti/65728.pdf