Anyone with a financial interest in renewable energy has exposure to weather and climate-related risk. Understanding, quantifying and managing that risk is absolutely essential to the successful development and operation of renewable energy projects.
Alternative Energy Risk Analysis
Craig Husa | 3TIER
Tell me about 3TIER. What do you do?
The fuel of wind, solar, and hydro power projects are driven by weather. 3TIER is a global company that uses weather science to help its clients manage the risk of weather-driven variability.
Our energy marketing services, which are focused on managing risk in the short-term, forecast how much power will be produced by a project the next hour to a season ahead. These services are primarily used by utilities, grid operators, and energy traders. Our project feasibility services are focused on long-term risk, assessing how much power will be produced over the life of a project. These services are primarily used by project developers and financial institutions that fund the development of projects. Finally, our asset management services enable clients to understand how weather has impacted, or will impact power production across a large portfolio of projects.
Why is this work important?
Anyone with a financial interest in renewable energy has exposure to weather and climate-related risk. Understanding, quantifying and managing that risk is absolutely essential to the successful development and operation of renewable energy projects. 3TIER’s “sweet spot” is integrating on-site observational data with numerical weather prediction modeling to achieve the highest level of certainty possible.
How has 3TIER’s business changed in the last few years?
The scope and complexity of what 3TIER does has expanded dramatically, fulfilling the increasingly sophisticated needs of a larger and more mature renewable energy market. In addition to our bread and butter assessment and forecasting businesses, we’re doing advanced project forensic work to determine why some existing projects are not meeting production expectations. We’re doing a lot more comprehensive resource assessments for lenders, and we’ve built a high level of trust debt and equity providers to complement our work with developers. We’ve developed sophisticated performance reconciliation programs, giving clients insight into wind performance across vast networks of met towers and turbines. And we’ve developed regional power forecasting, which aggregates production forecasts and gives energy traders and grid operators tools for scenario analysis. Those are just a few examples, and we have a good pipeline of really important products that will further enable the renewable energy market to manage risk.
Why does 3TIER work across wind, solar, and hydro rather than focusing on just one renewable?
Since 3TIER’s core competencies are in weather science and weather modeling technologies, there are actually a lot of synergies between our work in wind, solar, and hydro power. And philosophically, we’ve always been renewable technology agnostic, recognizing that in many cases these technologies are complementary to one another rather than competitive. In fact, that’s why we were the first, and we remain the only organization that has ever developed comprehensive datasets of the world’s wind and solar resources.
What is on the horizon for 3TIER? Where are you headed?
We’re really focused on three things. The first is international growth. We are experiencing rapid growth outside North America, and we will continue to invest in products and support to serve growth markets. Second, we are diversifying our client base. We used to primarily serve project developers and operators, but today we serve a broad range of financial participants in renewable energy, from banks to energy traders to reinsurers. And third, we will continue to develop products and services that enable the industry to manage risk. That means not just providing data to our clients, but giving them relevant and actionable intelligence. We must give them the context they need to balance risk with opportunity.
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