IBM J. Res. Dev

Managing uncertainty in electricity generation and demand forecasting

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The most readily accessed and abundant renewable energy sources-wind, hydro, and solar-are weather dependent and are therefore inherently intermittent. Energy demand is also dependent on the weather as well as many other difficult-To-model factors. In fact, there are many uncertainty factors that affect the modeling of both energy demand and renewable energy sources. In this paper, we begin with an overview of several of the underlying changes taking place in the energy industry and then specifically consider the uncertainty inherent in the forecasting of energy demand and wind power. We conclude with a discussion of techniques to integrate energy demand and the renewable energy supply, each with their associated uncertainty factors, in a stochastic environment to enable better informed business decisions.