Renewable Energy
Because renewable energy is generated at randomly determined times it is critical to quantify the uncertainty involved. The economics of renewable energy depends on exploiting the optionality offered by this uncertainty. SIP Libraries may prove useful in this regard.
Daniel Krashin, Chair of Renewable Energy Applications at ProbabilityManagement.org, and Dr. Savage’s student at Stanford University, discusses the importance of energy storage.
Dr. Savage describes a “Paper Airplane” model that demonstrates the importance of SIP Libraries in analyzing renewable energy projects.
The Project Template file below contains instructions on how to use ChanceCalc to follow along with the video.
Project Template (.xlxs)
Energy Projects and Prices - SIPmath 3.0 Library
Project Template Solved (.xlxs)
The Economics of Battery Storage
Battery storage facilities are critical in stabilizing the power grid by balancing electricity supply and preventing outages. They reduce reliance on costly, high-pollution power plants. One of the benefits of using battery storage is energy arbitrage, which involves purchasing low-cost energy at night and selling it at higher prices during peak daytime demand.
Dan Krashin discusses battery storage. Watch video
Daniel Krashin, Chair of Renewable Energy Applications
The economics of energy arbitrage are complex due to the variabilities of power supply and demand. SIP Libraries can quantify these variabilities as statistically coherent data, which preserve complex interrelationships. This will provide a more chance-informed approach to investing in, and managing renewable energy projects. Our demo model simplifies the analysis by focusing on two key factors: the potential increase in costs during peak demand times (high energy prices) and the variability of prices during off-peak hours (low energy prices).