Estimating the Economic Value of Wind Forecasting to Utilities

Utilities are sometimes reluctant to assign capacity value to wind plants because they are an intermittent resource. One of the potential difficulties is that the output of a wind plant may not be known in advance, thereby making it difficult for the utility to consider wind output as firm. In this paper, we examine the economics of an accurate wind forecast, and provide a range of estimates calculated by a production cost model and real utility data. We discuss how an accurate forecast will affect resource scheduling and the mechanism by which resource scheduling can benefit from an accurate wind forecast.