Part 1: Energy Investment Risk and Future Climate
Rachael Jonassen, Department of Engineering Management and Systems Engineering, George Washington University, Washington, DC 20052, USA.
Introduction to Future Climate Risk
If you’re an engineer designing new PV systems, or an entrepreneur installing them, or a financier planning a large offshore wind turbine farm, you know the practical challenges you face day to day getting renewable energy to the client. And you know how these new systems can help in the fight against climate change. But do you think about how that climate change will be fighting you and your business? This article gives you some weapons to prepare for that battle.
We’ll cover this in three parts. The first, which you are reading now, illustrates how climate affects the viability and financial performance of all types of energy today. In the second installment we’ll go over methods to factor climate into your risk calculations and what risks may be in store for energy suppliers in the coming years. In the final installment, we’ll look in depth at what climate surprises can do to the financial performance or your projects during their expected lifetimes. All of these lessons directly relate to your enterprise and your job today.
So, let’s get started! Let’s look at how climate affects your business model right now.
A Parable – Direcho
We’d never heard of a “Direcho” until a strong windstorm blasted across 1000km of our country in 10 hours on 29 June of 2012 and knocked out our electricity for a week. The winds whistled by as we slept so it was morning till we knew what happened. Unlike hurricanes and tornados, there was no advance warning; utilities had just hours to prepare. No one predicted the outcome either. Over 4 million were without power for up to 10 days; longer than any other storm. Of the six states setting new records for percentage of customers disrupted, the previous high in one state jumped from less than 5% to over 60% of customers without power. Emergency crews battled an unprecedented heat wave – temperatures above 34°C – throughout the 10-day ordeal.
Climate and Investment Risk
Investors understand the opportunity that climate change presents: restructure our energy systems to reduce greenhouse gas emissions and the likelihood and extent of climate change. The opportunity is so great we might lose sight of the fact that climate change also presents a challenge to energy, every type of energy. Climate change creates new risks that affect the financial viability of energy infrastructure.
These risks are outside the range investors usually consider and require a new paradigm to address. Your fiduciary duty as an investor, or your professional duty as an engineer, or your legal duty as an installer, must address a new suite of possibilities, a new range of risks. As you read the following examples you will see a surprising number of places where climate affects the risk structure of energy projects but these examples can only begin to help you grasp the challenge. I hope you will see enough here to caution you to consider climate change as you think about helping your clients deal with energy issues.
Examples From the University of Hard Knocks
You will have noticed that the little vignette about the Direcho is really about weather, not climate. Or is it? Climate is the integral of weather over a period. Typically climatologists use one to three decades. Most recently, one decade is becoming more common because the statistics from one decade to the next don’t seem stable. Globally, the most recent decade was the warmest on record. The decade before it was the warmest on record until this latest one came along. And the decade before that was the warmest on record in its heyday.
If climate is the integral of weather, then weather is the derivative of climate, and that’s a good way to look at weather: phenomena derived from a distribution of possibilities. So the Direcho is derived from the climate of the time, a warmer climate than before. But what does that have to do with energy projects? How has that past climate affected energy?
In the United States, the Dustbowl Era brings memories of hard times that spread from the Great Plains where a long drought killed crop cover and kicked up dust storms that blackened the skies and clogged every piece of machinery and lung in its path. Now, imagine that you are a biofuels producer in Oklahoma in 1935. Your corn suppliers default as their crops fail, and you are unable to satisfy your obligations for ethanol delivery. Did you hedge that risk? Did the farmers who supplied you rely on electric pumps to raise groundwater for their crops? Does that electricity come from hydroelectric dams? Can those hydroelectric facilities operate with low flows? Did they hedge their production?
By the way, western Texas is now suffering a multiyear drought (again) and (again) ranchers and farmers are suffering and dams are at an all-time low so that energy from hydroelectric facilities is reduced. A drought is hitting many of the western states in the United States and many of the hydroelectric reservoirs are at all-time lows.
The lesson is clear … climate affects energy. Here the energy sources included biofuels and hydroelectric. Here’s another example of the vulnerability of hydroelectric to climate, one that’s happening now.
Colorado River Flows
There are fourteen dams on the main stem of the Colorado River, nineteen more in the upper basin and eleven more in the lower basin. Six, nine, and five of those respectively are hydroelectric facilities, the oldest of which was constructed in 1911 and the largest of which, at over 2GW, was constructed in 1936. Did the engineers properly plan for the kinds of climate the dams would encounter during their operational lives?
These hydroelectric dams must operate so as to supply water to downstream jurisdictions that is apportioned according to the Colorado River Compact but it turns out that allocations were based on one of the wettest periods in the past five centuries.
Recent reconstructions of past climate variation suggest “droughts more severe than any in the last 100 years occurred before stream gages were installed. The most severe sustained drought (based on the lowest 20-year average) in the Upper Colorado River basin occurred in the last part of the 16th century. This reconstruction also shows that average annual flows on the Upper Colorado regularly vary from one decade to the next by more than 1 million acre-feet.”
So, not only does climate change, it changes in ways that directly affect hydroelectric facilities, which are the source of over fifteen percent of electric power in the world. And, we can learn something about the vulnerability of our energy projects by better understanding the climates of the past and how they varied.
But what’s that got to do with me? I’m safe in Europe, far away from the droughts of the western United States.
The European Heat Wave
The 2003 heat wave that struck Europe was the hottest since at least 1540 and resulted in at least 30,000 deaths. Almost half of these were in France, and many of those were at homes lacking air conditioning. Results of that heat wave included massive forest fires (600k ha), faster melting of Alpine glaciers, 30% reduction in primary productivity of agricultural lands, and earlier harvest times., Lacking enough cooling water, some French nuclear plants shut down, six operated above legal limits for cooling water release temperatures, and electricity exports dropped by half.
Here’s a climate event that has multiple lessons. First, those that had air conditioning used it much more, so demand on electrical generation exceeded capacity and nuclear power producers had to secure energy on the open market, for which they were not reimbursed at a loss of €300M. Second, with reduced bioproductivity, biofuels production and cost is affected. Third, soot from forest fires did a double blow to PV cells. Soot obscured the sun and further reduced conversion efficiency as direct deposits on solar panels. Fourth, glacial melting reduced long-term water supplies for hydroelectric and changed the flow regime in the short term. So this climate event hit nuclear, biofuels, solar PV, and hydroelectric. The fifth lesson? Even a deep understanding of the climate of the past five hundred years would not prepare you for this event! What’s up?
Energy Projects and Climate
The examples above illustrate how the climate of today affects energy producers in every sector. As powerful as they are, these examples don’t explore all of the ways that climate, modern climate as we experience it now, figures into the energy picture. So in the remainder of this section let’s explore that in more depth with specifics on how climate affects each form of energy, fossil and alternative. Let’s begin with our old friend the fossil fuel industry.
Siting an Energy Project
Climate is so important it is almost invisible as we make decisions about siting energy projects. For example, we think about cooling water availability but don’t think of that availability as the result of climate. Or we may consider wind speed at various locations but ignore the long-term upper level pressure patterns that control the speed at 30m heights, and the atmospheric phenomena that control those pressure systems. So let’s be explicit about the ways that climate affects investment decisions in each type of energy source.
Coal and natural gas
Thermoelectric energy generation produces 90% of the electricity in the United States and relies upon steam driven turbines that require water for steam. Most of these also use water for cooling to power the phase change to steam that drives the turbines. The steam operates on closed cycle but over half of cooling systems are once through designs. The remainder are recirculating (40% of systems), cooling pond, or dry cooling (less than 1%). Water requirements vary dramatically between cooling technologies and across energy types. Choice of cooling system affects the amount of water required and the thermal efficiency of the plant and both affect its profitability. Because coal plants derive all their energy from steam they are more sensitive to the economics of cooling than are combined cycle natural gas plants since the combustion cycle does not depend upon cooling.
Once through cooling systems must draw cool water and return it as ‘waste’ water that averages over 8C° warmer than the source. This must be diluted by a much larger flow to avoid endangering native aquatic life. Having enough water for cooling depends on the climate. Different cooling types affect both the volume of water withdrawn (which is later returned to the source) and the consumption of water (which is the lost to evaporation). Although water withdrawal is lower, water consumption is greatest (up to almost 300 l/MWh) when plants use wet cooling towers and recirculating cooling (Table 1). High humidity (technically the wet bulb temperature) reduces the efficiency of evaporative cooling in wet cooling towers.
Table 1. Water requirements for cooling a conventional coal-fired plant (l/MWh).
The different power generation characteristics of coal (thermal steam) compared to natural gas (combustion plus thermal steam) leads to an interesting relation between temperature and plant efficiency. For coal plants, standard combustion models such as the Integrated Environmental Control Model (IECM) predict that efficiency will increase as temperature increases. Less energy is required to heat air in the boiler to the temperature of combustion. For natural gas combined cycles plants, the opposite effect holds and the plant becomes less efficient with higher temperatures since less of the total energy comes from the boilers (versus combustion). Combustion is less efficient since the lower density warmer air holds less oxygen and this effect is stronger than the boiler effect.
Air temperature also affects the efficiency of thermal generation. One study in the UAE found that for every K rise in ambient temperature above standard conditions gas turbines lose 0.1% of thermal efﬁciency and 1.47 MW of its gross (useful) power output.
Coal plants withdraw and consume about two-thirds of the water used in thermoelectric energy generation in the United States. Nuclear plants use the next largest amount; whereas natural gas fired plants are the most efficient water users.
Coal fired power plants may also depend on climate in another way as illustrated in the text box to the left. Many plants in Europe, Russia, and the United States depend upon river traffic to deliver fuel so low flows (or floods for that matter) can interrupt transport. Floods can also damage loading and unloading facilities along those rivers. The second example in the box to the left illustrates the impact of one flood on multiple energy sources.
Railroads transport most of the coal that goes to power plants and that transport is subject to disruption by climate-related events. Steel rails expand and contract predictably with temperature so abnormally high or low temperatures can bend rails or lead to dangerous gaps. Either can slow or derail train cars and create expensive supply disruptions. One 2.5GW coal power plant takes 2-3 unit trains (100 100-ton carloads of coal) every day.
Climate determines the availability of water resources and influences the temperature and chemistry of natural water flows in rivers. A thermal power plant, especially if using once-through cooling (about half of the plants in the United States) must be located along a reliable freshwater source with sufficient discharge that the returned water does not raise river water temperatures so much as to threaten aquatic life. Some power plants require a minimum depth of water for river transport of fuels. Change the climate and you may change both the flow and the temperature of the river.
Relying only upon historical records of flows (as illustrated above for the Colorado River) introduces additional risk into siting decisions if the climate is non-stationary, especially if it changes monotonically. Even relying on the long pre-historic record may not suffice, as illustrated by the European heat wave example. Global temperatures are now warmer than they were in that earlier period so it is not surprising if the hydrological regime is different too.
Coal may be vulnerable to climate at the source too. Deep mining of coal frequently encounters groundwater that can prevent access unless high-capacity pumps can lower the groundwater table. So extraction can depend on the flow of groundwater – again a climate-controlled process – and the availability of electricity for pumping (and we’ve already seen some ways that electricity supplies are vulnerable). Washing coal to remove impurities such as sulfur uses large quantities of water too.
For fossil fuel plants in general (least so for natural gas), climate interposes itself one more way at the end of the smokestack. Combustion emissions distribute pollution downwind through convective processes mediated by wind patterns and complicated by chemical reactions dependent upon both temperature and humidity. Indeed, an entire field of atmospheric science supports pollution monitoring, control, regulation, and enforcement.
Oil Production and Refining
Big oil is not immune to the caprices of climate. Though oil-fired power plants are not common due to cost and pollution concerns, they still comprise 8% of the sources of electricity in New York State although its just 1% of supply in the United States as a whole. Globally, oil contributes over 5% of electrical generation. In Saudi Arabia, oil and diesel provide over half the electric power. And, of course, oil powers our vehicles, almost all of our vehicles.
In addition to the effects described above for coal, climate impacts oil production in two other ways having to do with the availability of water:
- Injecting water (secondary recovery) or steam (tertiary recovery) below the source to raise pressure and force oil to the surface.
- Injecting water (with sand and chemicals) into wells after hydraulic fracturing to extract oil (and natural gas) from shale formations.
By the way, besides the usual climate effect on water availability we’ve already talked about, these processes depend on energy for the injection and tertiary recovery uses energy to make steam. So they all depend upon other (climate vulnerable) energy sources.
In addition to these effects of climate, many production sites are dramatically and negatively influenced by acute climate events – such as storms, floods and other natural hazards mediated by climate – that disrupt facilities (including refineries, pipelines, drilling platforms, and storage).
Chronic climate impacts on petroleum infrastructure include changes in the thickness, drift, timing of breakup of ice in Arctic locations, and permafrost instability affecting site access and the operation of pipelines such as the Trans Alaska Pipeline where over 40% of thermosiphons are damaged by thermokarst activity.
As in the case of fossil fuel plants, the standard climate concern for nuclear reactors is water availability for cooling. This is accentuated by a need for emergency cooling of damaged reactors in the event of an accident to prevent meltdown of the core. Given the greater concern for reactor safety, the reliability of the water supply is more important and the long-term record of flow is just as important as the long-term record of seismic activity, volcanism, and other natural hazards. Even more formally than in the case of the Colorado River and European heat wave examples described above, regulators require that these decisions consider reconstruction of the pre-historic record, a field well informed by scientific study.
But another concern demands even greater scrutiny of past and present climate, the long-term hazard from nuclear waste in the form of spent fuel rods. Since these materials remain hazardously radioactive for thousands (even millions) of years, enormous sums have been spent to understand the long-term stability of potential storage sites for spent nuclear waste, particularly this form of high-level nuclear waste. The greatest concern for exposures from storage of nuclear waste comes from changes in groundwater discharge that would convey nuclide-contaminated water to the surface where it might be consumed. Climate fluctuations are the major concern in such groundwater changes.
Hydroelectric facilities are the largest source of renewable energy in the world and are fully dependent upon the vagaries of climate. Indeed, an entire field of study focuses upon the role of climate in predicting river flows to optimize reservoir management for power generation. Here the emphasis extends beyond average flows to include natural variability, long-term inhomogeneity in flow, and short term ‘memory’ in river regime.
Outside of the Congo and a few other tropical rivers, virtually every major river in the world is fed by snowpack in mountain ranges including the Alps (Rhine, Danube, Po), the Tibetan Plateau (Yangtze, Brahmaputra, Mekong, etc.), the Andes (Amazon), and the Rocky Mountains (Colorado, Columbia). In these river systems, the connection of flow and climate is more complex since colder temperature produce precipitation (mediated by storm systems and local wind patterns) that forms snowpack in winter, whereas higher temperature, direct sunlight, and winds melt the snow in spring and summer. Buildup and melt of glacial ice further complicates the snowmelt-derived flow patterns in the largest mountain ranges.
The examples in the text boxes nearby illustrate the most worrisome challenge with hydroelectric power, the possibility of droughts and long-term reduction in flows. The combination of low flows, high temperatures and concomitant high evaporation rates decreases reservoir storage and the heat required to generate power.
Too little water is a problem, but the opposite condition, floods, threatens hydroelectric operations in other ways. High flows can overtop dams, require unplanned releases that interfere with optimal generation, and threaten downstream hydroelectric operations and communities. Floods also increase sedimentation in the reservoir, which lowers capacity and long-term productivity. Flood-borne sediment scours turbines and adds to maintenance or reduces efficiency. Of all the energy sources, hydroelectric may be the most dependent on, and most sensitive to climate.
New forms of energy generation have very different challenges from climate. Solar is a climate phenomena of first order; it is possible where sunshine is greatest, which means clouds are few, and rainfall is slight. Arid regions are solar magnets. Siting solar depends first upon parameters of sunshine.
Two climate factors modulate the success of all solar projects: cloudiness and dust. In some cases they are related as fine particles can act as cloud condensation nuclei. Clouds come in frontal storms, cumulus rising in convective currents, or from orographic pressure fluctuations as air masses pass over mountains. Their reflective properties, duration, and sky cover have different influences upon solar operations.
Weather phenomena including hail, frost, freezing, lightning, wind, and rapid fluctuations of temperature (such as from passing clouds) can damage solar cells, panels, or structural members. Blowing winds may down trees and limbs onto panels resulting in secondary effects of weather. The outer panels in an array usually experience greater wind stress and may deteriorate sooner than inner panels. Most manufacturers will not warranty against such damage but insurance may be available. Such insurance requires a careful analysis of the risk spectrum.
For concentrated solar power facilities that generate energy using traditional steam turbines, the usual concerns about water supply also apply as the example of the Mohave facility described in the text box above demonstrates. Some concentrating solar technologies do not use water to generate power.
As with solar energy, wind energy epitomizes the central role climate plays in creating and defining an energy source. The demand for proper siting information for gigantic and costly wind turbines has created a whole new discipline within meteorology to provide detailed four-dimensional wind power density maps at multiple heights and high spatial resolution for commercial and residential applications (Figure 2). Because of varying needs depending upon turbine design, maps now show wind resources at 30m, 50m, 80m, 90m, and 100m in the United States. Besides location, important factors include: 
- Velocity profiles in the 20m to 200m height band (and the 90m to 100m nominal design hub height for offshore turbines)
- Diurnal and seasonal changes in wind speed.
Figure 2. Example of map products available for wind speed. This one shows the state of Wyoming at 80m height and 2.5km resolution. Source: US Department of Energy WindExchange, http://apps2.eere.energy.gov/wind/windexchange/wind_resource_maps.asp?stateab=wy.
Wind energy varies as the cube of wind speed so small errors in estimates of speed have very large impact on estimates of available power. Greater velocities help but Betz’s Limit on turbine efficiency suggests that horizontal axis turbines cannot extract more than about 60% (59.3%) of wind kinetic energy. Cut-in wind speed (3-4 m/sec) depends upon rotor characteristics, which are designed for median velocity, and that in turn affects rotor efficiency. The longer winds remain below cut-in speed, the lower the payoff for the operator. Cutout speed (usually 25m/sec) protects the rotor from physical damage through braking in high winds so excessive high velocity winds actually decrease output power.
The power curve of a typical turbine (and so its mean power delivered) depends upon the frequency distribution of wind, which is usually modeled as a Weibull Distribution. This information comes from long-term observations of historical wind behavior. As with the example of the Colorado River cited above, investors cannot be sure that historical patterns adequately describe what velocity distributions the turbine will encounter during its lifetime. Moreover, observations of wind are more limited and less reliable than those of temperature and the observations systems and methods have changed greatly with time. Determination of rotor design for a site is further limited by the engineering approximation of the standard deviation of the wind velocity distribution as 52% (based on the classical Rayleigh Distribution).
In addition to velocity, turbulence, shear, acceleration (gustiness), and predictability itself (variation and autocorrelation) influence risk, profitability (and payoff period) as well as load spectrum, structural integrity, and the lifetime of the investment (and so Return on Investment). Large-scale reliance on wind power risks periods with insufficient winds to power the system so integrating power generation across the widest possible region increases the probability of sufficient power. This in turn increases the likelihood that other weather events may disrupt the system (including transmission) so climate knowledge is critical in designing a national power system using wind. At this scale, the passage of storm systems has a predictable (and may have an unpredictable) effect upon system performance. Most systems require standby power because of the intermittent nature of wind and that solution further reduces the profitability of the system.
Understanding the variability of wind resources at a point relative to fixed turbine orientation allows better prediction of blade fatigue spectrum and fracture likelihood. Understanding fatigue failure mechanics linked to wind histories helps in customizing blade design and optimizing performance. The necessary data for such customized designs include long records of wind patterns at the site coupled to wind simulation tools that continue to evolve in sophistication.
Lightning threatens wind turbines almost anywhere although some areas are more prone than others (Figure 3). Lightning rods protect against direct strikes but not all lightning threats. Class one arrestors take the bulk of the charge while class two arrestors conduct the initial current load. It’s particularly important to protect the bearings. Carbon brushes ground the charge and help in this regard.
Wind turbines are subject to abrasion by windborne particles so, as with solar, siting requirements include locating wind farms away from areas where abrasive particles may be entrained by the wind, which requires the ability to model wind trajectories and sediment transport.
Particularly in offshore settings, storms can damage turbines from the wind or pounding seas. Even in the absence of storms, wind-driven waves can interfere with installation and maintenance of wind turbines and wave heights above 15 meters can significantly damage the platform.
To return the favor that climate can do in affecting wind farms, these farms, in particular the rotating blades, can affect radar signals and so affect the prediction of weather that depends upon Doppler radar. This in turn may affect the ability to prepare for adverse weather events and protect turbines from high wind and waves.
One unanticipated effect of offshore wind turbines may be to reduce wind speed associated with hurricanes. Large turbine arrays far from the eye of the storm may extract enough kinetic energy from the winds that wind speeds drop 25–41 m s−1 and storm surge is reduced 6–79%. This may increase the chances that the turbine array (and much else) survives the storm. So, not only does climate affect renewable energy projects, they may return the favor!
Biofuels and Biomass
Biofuels and biomass depend upon climate, as does most biological growth. It is not practical here to delve into the range of biomass and biofuel source species. To illustrate some of the controls climate places upon these energy resources, let’s explore its effect upon corn since it is now a major source of biofuels, whether from the grain or the cellulose.
Much of the climate dependence of plants derives from their photosynthetic pathway (C3, C4, or CAM). Plant enzymes, like other proteins, are three-dimensional molecules whose geometry determines interaction with other proteins and simpler molecules. That geometry is temperature sensitive and is the underlying mechanism by which temperature stress affects physiological processes in the plant. Corn uses the C4 metabolic pathway, which is more water efficient.
Corn growth depends upon solar radiation, temperature variations, growing degree-days, humidity, and soil moisture. It is further modulated through specific acute or chronic climate-driven events. The effects of these factors vary during the growth stages of corn and interact. For a crop, climate is the integral of all of the instantaneous factors of weather over the full growing period. Because some weather events, such as extreme temperature, can be limiting factors, the integral does not fully predict success, which means crop science is inexact and measures of uncertainty are essential for risk management. Natural variability within the crop amplifies as well as modulates this risk.
Extreme low temperature and extreme high temperature affect corn growth. The cardinal temperatures include the absolute minimum (10°C), the optimum minimum (18°C), the optimum maximum (33°C), and the absolute maximum (47°C). Corn survives temperatures from 0°C to 47°C. Below 5°C corn grows slowly. Between 0°C and -2°C there is no damage. Below -2°C damage occurs (that leads to reduced photosynthesis and delayed pollination) that depends upon how cold it gets, how long it lasts, and the growth stage. Seedling stage is most sensitive and it’s the soil temperature in the top 5cm, where growth emanates, that matters most. Late season low temperatures damage the growing point and stunt further growth. Growth is quite sluggish below 8°C and planting season begins when temperatures rise to 13°C in the upper soil layer. Pollination is impeded at temperatures above 35°C, particularly if the soil is dry; silks wilt and pollen is damaged.,
Cumulative warmth (Growing Degree Days, GDD), the integral of average daily temperatures (Equation 1) above Tb = 8°C closely determines productivity (Table 2), but only when temperatures remain within the 8°C – 29°C band. Various hybrids require more or fewer growing degree-days. The 29°C cutoff defines another metric, Killing Degree Days, also computed as an integral, which measures direct damage to tissue and enzymes.
Cumulative heat stress (defined analogously to Equation 1) helps measure another factor affecting yield with threshold temperatures of about 35°C. Heat stress decreases yield only slightly unless also accompanied by drought stress.
Soil moisture strongly influences corn productivity even when temperatures are optimal. Corn grows best with at least 0.6 cm moisture per day and 0.9 cm per day during pollination. Moisture stress reduces nutrient uptake and growth, and weakens resistance to disease and insect damage. Yield loss at these times depends on how long the moisture deficit lasts, the magnitude of the deficit, and the stage (pollination ± 2 weeks is most sensitive, then grain filling, then growth). This latter issue is most important when corn is used for cellulosic biofuels since vegetative growth can be reduced 10% to 20% from water stress during that stage. Moisture stress during silk formation can cut yield 50%. Once mature, moisture deficits don’t affect corn yield.
Floods also affect corn production. Small floods can cut oxygen supply to roots. Larger floods reduce photosynthesis when leaves are inundated. Warm sunny weather accentuates the oxygen depletion effect of floods by speeding photosynthesis. In cool, cloudy weather plants can survive a week of flooding. Longer effects of flooding include reduced root growth, weakening access to nutrition and reducing plant support. Plants are less susceptible during later stages of growth. Thus, the magnitude of a flood and the duration of the flood both affect corn yield.
In interior continental areas such as the Midwest United State hail, produced from convective uplift in the heat of summer, is a destructive fact of life. Hail damage to corn arises from defoliation and impacts corn yield most during tasseling. Hail during early and late stage growth has less impact on yield.
This overview of how temperature and moisture can affect corn growth and yield illustrates the influence of climate upon one crop, albeit a very important one for biofuels. Similar relations apply in other crops to a greater or lesser extent and some crops are chosen for biofuels or biomass production because they are more resistant to climate effects or can withstand the climate typical of areas less important for crop production so that they don’t compete with the high land values of those areas.
Energy production depends upon the realization of climate, and large to small scale variations in climate influence the production, transport, and availability of energy. Risk to energy investments includes climate-related risks, which can be very large and lead to acute or chronic disruption in energy operations. The examples discussed here demonstrate that the risks range across a wide spectrum of climate phenomena and differ in character and magnitude for different energy industries. The magnitude of impact of the same weather event on various energy sources can differ substantially and differentially affects different parts of each energy supply chain. Examples cited above also demonstrate how climate variations over the period of record continue to influence the viability of different energy projects. The records of past and present climate are incomplete and may mislead investment decisions. We can expect similar or larger variations in the future that will impact investment risk, particularly for energy projects with long payoff periods.
In the next of this series we will examine how information like this gets factored into investment decisions and how that becomes even more important as prospects for greater fluctuations in climate appear more likely.
Rachael Jonassen at Masdar Institute
of Science and Technology
Professorial Lecturer and Visiting Scholar
The George Washington University
Engineering Management and Systems Engineering Department
Washington, DC 20052 USA
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 Small rotors are particularly sensitive to rapid changes in wind speed.
 Correlation with distance usually falls exponentially with distance, and the decay exponent depends on the climate regime.
 Diamond, K.E., 2012, Extreme Weather Impacts on Offshore Wind Turbines: Lessons Learned, Natural Resources & Environment, Volume 27, Number 2.
 Taming hurricanes with arrays of offshore wind turbines, 2014, Jacobson, M.Z., Archer, C.L., and Kempton, W., Nature Climate Change, 4, 195–200, doi:10.1038/nclimate2120.
 These terms refer to the enzymatic pathway, primary product, and structure of the photosynthetic apparatus of photosynthesis. C3 plants use a different enzyme
 See, for example, Schlenker, W. and Roberts, M. J. Nonlinear Effects of Weather on Corn Yields. Review of Agricultural Economics. 28, 391-398 (2006).
 Hollinger, S.E., and Angel, J.R., Weather and Crops in Illinois Agronomy Handbook, Chapter 1, p.1-12. http://extension.cropsci.illinois.edu/handbook/, accessed 22 November 2014.
 Nafziger, E., Corn in Illinois Agronomy Handbook, Chapter 2, p.13-26. http://extension.cropsci.illinois.edu/handbook/, accessed 22 November 2014. In the United States, all of these calculations and cutoffs are expressed in degrees Fahrenheit.
 Material in this section draws from the Agricultural Extension Service at Clemson University, http://www.clemson.edu/extension/rowcrops/corn/guide/environmental_conditions.html.