Potential economic value of seasonal forecasts of water flows for hydropower production.

Demonstrating the potential economic value of seasonal forecasts is a fundamental signal to mainstream their application in real life and make them actionable instruments to cope with future climate change and to promote adaptation measures and sustainable management of natural resources.

This presentation aims to explore the potential economic value of monthly seasonal forecasts of water flows in a reservoir located in Colombia (i.e. Betania) delivering hydropower production during the period 1993-2016. To assess the economic value a maximizing simulation is applied using two alternative forecasts samples, namely the climatological mean, and the forecasts produced by the climate service SCHT (www.https://gecosistema.com/climate-tools/scht-smart-climate-hydropower-tool/). Then, the simulation has been fed with effective realizations to produce a benchmark. Finally, we get the maximum potential value, when effective realization is considered, and the potential achievable values of the alternative forecasts and their deviation with respect to the benchmark. The simulation is set as a revenue maximizing problem for a representative producer according to a series of technical constraints, such as the reservoir capacity and its volume.

Results demonstrate that SCHT forecasts have a positive value compared to the climatological mean forecasts in normal conditions. For this reason, the analysis is enriched with a sensitivity test on the technical constraints. Therefore, we produce a set of alternative scenarios considering different capacity and volume levels. For volume, we assume either 100% or 50% (net of natural discharges), and for capacity, we assume either 900 m³/s (the maximum) or 600 m³/s. The final objective is to understand whether the technical constraints affect the results and which constraints has a higher impact.