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Sean CarnahanFiled under: Uncategorized
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Register for this free SunGard Energy & Commodities Webinar
http://bit.ly/financialriskwebinar
What has the financial crisis taught us about risk management? Do you think the "reach for yield" distort the market's risk preferences?
Join SunGard Energy & Commodities and Dr. David Rowe in this complimentary 60-minute Web Seminar. Learn about the evolution of risk management, where it failed during the credit crisis and the lessons we learn from it. See, how these lessons impact the energy markets.
Learn from this expert in the risk management industry about:
- Statistical entropy – the inherent limits of quantitative tools
- Importance of structural imagination - why we neglected dimension of risk analysis
- Self-Referential Feedback - the danger of corrosive feedback loops in pricing and risk management
- Complexity and Dark Risk - intransparency breeds hidden dangers
- Alternate Means of Valuation - ignore a possible failure of liquidity at your peril
Discuss with David the attention which has been paid to Value-at-Risk (VaR) as a tool for risk estimation and his definition for VaR not being the "worst case loss".
Below link is to register for this free SunGard Energy & Commodities Webinar
http://bit.ly/financialriskwebinar
o Date: October 29, 2009
o Time: 10:00am CST (4:00pm CET*)
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Sean CarnahanFiled under: Uncategorized
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From Energy Matters A blog exploring IT efficiency, energy and sustainability
The Energy Cloud
A good deal of opinionating on Cloud Computing is slowly transformed to real substance: standardized services over the net. They range from Google search to salesforce.com to EMC's Mozy offering of on-line backup.
During a customer forum last week, one gray-haired IT director asserted that these ideas were nothing new but just a new twist on Mainframe time sharing.
Perhaps. I never argue with a Mainframe guy.
But the twist is that we can accomplish this now in ways that were not available before. What was lumbering and expensive can be fast, elegant and cost-effective.
That's where new technologies, or new application of old technologies become the innovation drivers.
So, apply the same principles to energy. Think of it as the energy cloud. Solar, and wind and wave energy generation are not new, but the refinement of the means and the changes in economics and the consciousness of environment, make them much more appealing and realistic.
Of course there is also the profit motive.
Wind Power
T. Boone Pickens, the US billionaire oilman, testified before Congress last week about his campaign to create a wind-energy grid in the Midwestern US. He wants to replace gas-fired power plants with windmills.
Pickens expects to spend tens of millions of his own money promoting the idea in television and Internet advertising. In ten years he sees it as feasible to replace as much as 38% of US oil imports by using wind energy.
This is not an altruistic initiative.
Pickens is a billionaire. He says he's in the energy business, not the oil business. And economically and technically the opportunities are there to ramp wind while oil is dialed back.
In his testimony he cited national security as a primary motivation. But he's also a businessman and is investing huge amounts of money to build a windfarm in West Texas that will produce 4000 megawatts, the equivalent of two and a half Nuclear power plants.
Pickens noted that a number of other nations…"such as Germany, are ahead of the United States when it comes to using wind power for electricity."And Germany doesn't even have good wind. We have fabulous wind"
The U.S. wind industry has been seeing phenomenal growth in the last few years - 45% in 2007, and more than half of that is already in Texas where there are already 5,300 installed megawatts. That's enough for more than a million Texas homes. And I thought they only did coal.
Of course there are lots of other places where wind is already a well developed energy source. In Ireland, for example, there is nationwide program for wind and solar power.
And an enterprise called Airtricity is developing a "European Offshore Supergrid, bringing together the latest technology in wind generation and electricity transmission to provide a secure, sustainable and uninterrupted supply of electricity to EU member states."
I was in Britain last week and saw an Ad for "npower" promoting a program called "Juice" that produces energy from solar, tidal and wind; mostly wind. They promote it to customers, giving them the choice of fossil or renewable at the same price:
"Juice is generated from a number of renewable energy sources, primarily at North Hoyle Offshore Wind Farm. As a Juice customer, npower matches every unit of normal electricity that you use and feeds the same amount, generated from renewable sources, into the electricity network*.
It's as simple as that."
Waves and Tides
Off the Cornish coast they are also developing the world's first wave farm which is expected to come on line within three years.
Talk about a refresh of old technology concepts; some of the principles involved here can be traced back to Archimedes. Older than Mainframes!
Here's the other not-so-surprising note on this project, it's partly financed by Shell Oil. Pickens isn't the only one that isn't just in the oil business any more.
There are also a number of practical applications already on line to harness wave power.
Tidal energy generators are large underwater turbines placed that capture energy from high tidal movements in order to produce electricity.
Already operational on the coast of Wales, tidal power has terrific potential for future power and electricity generation.
Solar
Germany is already the worlds leading power producer from the Sun. About 55% of the world's solar energy is harnessed in Germany. Spurred on by a renewable energy law passed in 2000, about 3 percent of Germany's electricity now comes from the sun. By 2020 the government wants 27% to come from all renewables, up from 13%.
In large part the solar farms are modest compared to the heavy investments aimed at becoming the leading producer of advanced solar energy technology. The industry has created tens of thousands of jobs and is "posting growth rates that surpassed the optimistic forecasts made by the fathers of a pioneering 2000 renewable energy law."
They may too far from the equator, and too overcast and rainy to be the best solar location, but they intend to profit from supplying those who are.
Solar from Space
Here is one that may sound like science fiction: solar power from space.
Collect solar energy in space and beam it back to earth for an endless supply of relatively cheap and secure power.
How cool is that?
Apparently this concept is also not new and according to an article in the International Herald Tribune last week there is quite a lot of serious investigation and development already underway to test feasibility.
The idea is to build large solar energy collectors that will orbit the Earth. Unlike land-based stations they are not hampered by weather, angle of the sun or darkness.
The collected solar energy is beamed to Earth using wireless radio transmission to receiving stations near cities and points of primary use. There it's converted to conventional electric power. Cost per kilowatt-hour is projected to be about the same as today's common consumer rate.
Now they still need to get efficient collectors up there. NASA is working on a public-private launch service initiative that may get the job done. And you can expect that future thinking businesses will be looking at this as a new way to turn a profit.
How about Exxon Space Energy? Wouldn't be surprised to see Pickens in on this after the windmills are all spinning.
Energy Cloud
Wind. Wave. Water. Solar. Renewable and feasible.
So back to the Cloud analogy. All of these can feed power to the grid. You may have excess power from your own sources that you can feed into the grid. Like Utility or Cloud computing, we have choices and potential that we didn't have before.
It's all progress. It's an environmental improvement opportunity. It's an economic opportunity too. Just ask T. Boone.
Best regards,
Sean CarnahanFiled under: Uncategorized
Sept. 13-16: The Ground Water Protection Council and the US Department of Energy will host the first water-energy sustainability symposium to address challenges in meeting future water and energy needs. It will be held in conjunction with the GWPC’s 2009 annual forum in Salt Lake City. Aimed at both state and national policymakers, the symposium will bring together more than 60 top water and energy experts to discuss water use and its energy development impacts; water needs for unconventional oil, gas, solar, hydropower, and nuclear power production; integrated water-energy planning, and other hot topics, GWPC said. For a full agenda and registration information, go online to www.gwpc.org.
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Filed under: Uncategorized
Published: Aug 21, 2009
Sam Fletcher
OGJ Senior Writer
The expiring September contract for benchmark US sweet, light crudes rose 12¢ to $72.54/bbl Aug. 20 on NYMEX. However, the October contract dropped 92¢ to $72.91/bbl. On the US spot market, WTI at Cushing was up 12¢ to $72.54/bbl. Heating oil for September delivery lost 3.35¢ to $1.89/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month fell 5.24¢ to $1.98/gal, wiping out much of the gains from the previous short rally. The September contract for natural gas fell 17.4¢ to $2.95/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 2¢ to $3.02/MMbtu. In London, the September IPE contract for North Sea Brent declined $1.26 to $73.33/bbl. Gas oil for September was up $3.25 to $603.75/tonne The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes gained $1.44 to $72.57/bbl on Aug. 20.
Best regards, Sean Carnahan
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SunGard Energy Solutions | www.sungard.com/energy
Sharon Fortmeyer-Selan. Barely two years ago, we heralded the hedge funds and financial institutions for the liquidity they brought to commodity markets. The widespread financial crisis has dampened this liquidity as some participants retrenched or withdrew from commodities markets. More significantly, it has brought extreme volatility and fueled deep concern, some might even say fear, about counterparty risk. These impacts are in turn giving rise to several key themes or trends. One trend is a significant shift of volumes of over-the-counter (OTC) trades to exchange-backed clearing or clearing houses. Another is a trend toward independent validation of positions and books which translates into an increased need for price and valuation transparency. A third trend is toward tighter internal controls and increased regulatory oversight. How will the shift to cleared trades impact processes and systems?
SFS. Clearing requires a sufficient number of participants and liquidity to work. Nymex introduced its clearing platform and began offering OTC cleared products in 2002. Since then, the number of OTC products Nymex offers has grown to over 600. One element of achieving this is to develop standardized products and an efficient way to price and settle them. To handle the complexities of more exotic trades, we will need to implement new processes for price discovery and upgrade technology to support the unique characteristics of these trades. Systems like SunGard’s Aligne that incorporate grid-technology, service-oriented architectures, configuration flexibility and scalable performance provide a platform for clearing OTC trades. Today’s ability to connect and settle directly with exchanges like Nymex and ICE and clearing houses will be complemented by the ability to present an aggregated view of the data across transactions and operations for immediate decision-making. What is the best way for businesses to achieve transparency and control?
SFS. Speed and accessibility of reliable, timely market data is a key success factor for commodity traders and other market participants. Aggregating price, volume and other key transaction data from multiple sources including exchanges, pools, counterparties and partners and applying analytics against the results enables transparency. The automated capture of data from the exchange cleared transactions in conjunction with clearly defined processes for price discovery helps support the requirement for transparency. Increasingly available with low latency, this data enables more immediate decision-making. Defining and documenting transaction processes from deal capture to expiration is a critical element of controls. Establishing the rules based on roles, risk tolerances, or other parameters, monitoring adherence to them, and setting alert thresholds is also key. Automating the associated process workflow strengthens and streamlines the controls.
How can technology help address these challenges?
SFS. Automating the flow of information from the initial transaction initiation through to its execution and expiration helps to remove the human element of operational risk. This seamless information flow provides straight-through processing that may be facilitated by workflow automation tools for greater accuracy and speed. Service-oriented architectures with enterprise messaging and business process automation are foundational technologies to enable the transparency, controls, and agility needed to navigate challenging business environments. Standardized contracts and processes, real-time transactions, accurate market data and configurable risk toolkits combine with direct market and exchange clearing to help commodity market participants rise above economic challenges. SunGard’s Aligne provides an advanced set of risk assessment and risk management tools designed specifically for energy traders, risk managers and credit officers, to help them measure and manage a number of key energy exposures. Aligne delivers these capabilities through one fully integrated solution suite, deployed and supported by one collaborative team of experts.
Sharon Fortmeyer-Selan is Senior Vice President, Marketing for SunGard Energy Solutions. She brings over 25 years of experience in software solutions marketing to her role. Fortmeyer-Selan has served as Chief Marketing Officer for several start-up software companies and held leadership positions in solutions marketing for Compaq, AT&T, and NCR specializing in transaction processing, business intelligence and emerging technologies.
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One of the first R&D grants to a renewable-energy developer from the economic-stimulus funds approved by Congress this spring could have a dramatic impact on the design of wind turbines. The $16 million loan guarantee offered by the U.S. Department of Energy (DOE) to Berkeley, CA-based Nordic Windpower will accelerate commercialization of the company's Swedish-designed, two-bladed wind turbines, marking the first utility-scale alternative to the industry's dominant three-bladed design in over a decade.
In recent years, wind-energy entrepreneurs have already been pushing beyond the standard design. Blue H Technologies of the Netherlands and Norway's SWAY, for example, are testing unorthodox turbine designs tailored for placement on offshore platforms anchored in deep water far offshore. Blue H is testing two-bladed turbines akin to Nordic's, while SWAY has a three-bladed design that faces the rotor downwind, bucking the industry's conventional into-the-wind orientation.
The attraction for all three companies to pursue innovative approaches is essentially the same: their designs could be substantially lighter than today's turbines, and could thus produce energy at much lower cost. That remains an important goal for wind power, which, though presently the cheapest form of renewable-power generation, remains dependent on government incentives.
What sets Nordic apart from others rethinking wind-turbine architecture is that its prototypes have been operating successfully for over a decade. Backed by Goldman Sachs since 2007 and now by the DOE, the company plans to begin shipping commercial models later this year. Nordic's experience should help overcome skepticism that such alternative designs can be robust in megawatt-scale machines–skepticism that was reinforced by earlier, failed experiments with two-bladed and downwind turbines.
Nordic Windpower CEO Tom Carbone, who formerly led the U.S. operations of Danish wind-turbine giant Vestas, says that Nordic's key technology is the "teetered hub" that the two blades use. Nordic's hub provides a flexible link between the rotor and the generator driveshaft, enabling the blades to move in and out of the plane of rotation in response to gusts or turbulence. Carbone says Nordic's lightweight design can deliver a whopping 20-25 percent cost reduction relative to three-bladed turbines.
Bumpers constrain the hinging to just two degrees in either direction, but that is enough to shed unwanted forces that would otherwise strain the turbine's gearbox. Shedding unwanted forces also means that the entire structure, from tower to generator to blades, can be built lighter and cheaper. "You're reducing the amount of material normally used to strengthen the structure against those loads," says Carbone.
Delivering on the promise of savings, however, is harder than it sounds. Nordic's design, Carbone says, "is pretty simple in function. It's a just a hinge that's perpendicular to the rotor. But perfecting that simplicity took a lot of time and effort."
Larry Miles has spent the last decade trying to develop a flexible two-bladed wind turbine with individually hinged blades. Miles's Wind Turbine Company, based in Bellevue, WA, was preparing to push a 500-kilowatt prototype of its hinged-blade turbine to 750 kilowatts when a control-system error allowed one blade to swing too far and strike the tower. The resulting damage ultimately caused the DOE to withdraw support for the firm's research program.
Carbone says that such setbacks have not tarnished Nordic because its teetered design is already well proven. Since the mid-1970s, the Swedish government has poured close to $75 million into Nordic's Swedish predecessor, producing a string of prototypes. Four of the five one-megawatt turbines Nordic has installed since 1995 are still running, demonstrating an average mechanical reliability of 98 percent. "We can catapult off that experience and use today's control [systems] and materials to make an even better product," says Carbone.
Nordic's plan is to first validate its design by selling turbines to community-scale wind-energy developments with up to 20 turbines–projects that are too small to support a dedicated maintenance staff and therefore need reliability. Nordic says it already has orders for 19 turbines for small installations at a military base in Arizona, a housing development in Minneapolis, and a power project in Uruguay. The primary use of the DOE loan guarantee will be expansion of the company's assembly plant in Pocatello, ID.
Carbone says Nordic will ramp up carefully to assure reliability and customer satisfaction before engineering its next step: a 2.5- to 3-megawatt turbine to compete for use by large, utility-scale wind farms. "In 2012 we will prototype a 2.5 to 3-megawatt machine, which will take us to a $1 billion company in roughly seven years from now," promises Carbone.
Miles estimates that the savings from Nordic's design might be closer to 10 percent. But Miles says that could still make an important difference: "If their machine works reliably, they're going to have a definite cost advantage over a three-blade machine."
Copyright Technology Review 2009.
Best regards,
Sean Carnahan




