Is "median of net output for hours:" even an adequate metric for highly correlated resources?
For uncorrelated resources, the central limit theorem applies, and you can assume that the actual distribution of all the plants will be tightly clustered around the median. Stick on an X% margin to cover that remaining variability and call it a day.
But highly variable and correlated resources don't work that way, they act like a single continuously variable resource, so the distribution is far, far broader...
The problem is that ISO-NE isn’t planning for the median result; they’re planning for the nightmare tail risk result. As those tail risks get longer and scarier, they get harder to make financial bets against.
I'd love to read an article about if/how any of the guarantees are insured. Ik for commercial real estate there are insurers for insurers for insurers and when natural disasters happen there are at least payouts for businesses that need to recoup.
Always surprised to read about economic planning in the US. With energy planning it's hard avoid, but maybe this is an iconic example of why we don't like economic planning in the US. There's some vision where generation and distribution magically materialize to meet demand
Is "median of net output for hours:" even an adequate metric for highly correlated resources?
For uncorrelated resources, the central limit theorem applies, and you can assume that the actual distribution of all the plants will be tightly clustered around the median. Stick on an X% margin to cover that remaining variability and call it a day.
But highly variable and correlated resources don't work that way, they act like a single continuously variable resource, so the distribution is far, far broader...
The problem is that ISO-NE isn’t planning for the median result; they’re planning for the nightmare tail risk result. As those tail risks get longer and scarier, they get harder to make financial bets against.
I'd love to read an article about if/how any of the guarantees are insured. Ik for commercial real estate there are insurers for insurers for insurers and when natural disasters happen there are at least payouts for businesses that need to recoup.
I’ll get to ISO-NE’s Financial Assurance Policy in a couple weeks…there were some updates :)
Always surprised to read about economic planning in the US. With energy planning it's hard avoid, but maybe this is an iconic example of why we don't like economic planning in the US. There's some vision where generation and distribution magically materialize to meet demand