This research is facilitating accurate pricing of wind derivatives, leading to stable revenues and increasing investor confidence in renewable energy projects.
The problem
Wind power is an important source of renewable energy in the quest to reduce carbon emissions and address climate change. But its uncertainty and variable nature results in fluctuating revenues for energy producers, posing a hurdle to its growth.
The research
Associate Professor Zhou's research uses tools from actuarial science to improve wind derivatives, a financial instrument for managing uncertainties in renewable energy. Namely, her team proposes a novel model to capture wind's non-standard characteristics, enabling more accurate modelling, and develop versatile pricing approaches for wind derivatives that accommodate a wide range of wind speed processes.
The impact
This research advances understanding of wind production uncertainties and facilitates accurate pricing of wind derivatives, promoting a more liquid market and efficient use of these instruments. This results in stable revenues, increasing investor confidence in renewable energy projects. The research also shows the potential of actuarial expertise in influencing and shaping climate change mitigation strategies, promoting growth in this critical area.
Department: Economics / Centre for Actuarial Studies
Area: Actuarial science and climate change
Sustainable Development Goals
We align our research activity with the United Nations' Sustainable Development Goals (SDGs).