By Manfred Dworschak
Knowing if a particular summer will be hot or not can mean millions to certain companies.
Already in April, REWE, which operates a number of well-known German retail chains, unloaded onto the market a product that wasn't exactly part of its ordinary range: around three gigawatt hours of electricity, or enough to meet the annual energy needs of about 700 households. To put it another way, REWE sold its options to buy the energy packet, which it was entitled to exercise in June and July. At the time, many electricity dealers thought it was a strange move.
Electricity -- like pork bellies, telephone minutes and other commodities -- is traded on exchanges. REWE has a subsidiary called EHA set up specifically for this purpose, and REWE buys electricity for its own needs through EHA. As a company that uses about as much electricity as the large German city of Hanover, which has half a million inhabitants, it sometime buys the commodity years in advance. Large amounts of electricity are needed to power REWE's refrigeration rooms, where perishable products are stored, as well as its freezers and refrigerated shelving in supermarkets.
Every summer, the demand for electricity to keep food fresh rises, especially during hot weather. When that happens, prices go up on the exchanges. Astute users stock up on electricity when the prices are low; buying electricity when summer temperatures are already high can get very costly.
So, given all of that, why on earth was REWE unloading its electricity options in the warmest April on record?
The Supercomputer Trump Card
The rest is now history. Summer 2007 was unusually cold, and electricity prices dropped as a result. REWE, for its part, raked in a tidy additional profit. As EHA spokesman Arnd Kiesselbach puts it: "We sold our surplus when people were still willing to pay good money for it."
The scouting for the crafty deal took place in the British city of Reading, where a supercomputer constantly runs weather simulations months in advance. According to the computer's calculations, even by as early as April, things weren't looking too good for summer 2007.
The computer is part of the European Center for Medium-Range Weather Forecasts (ECMWF). For the last few years, researchers there have been trying to do something that the weather's inherently random nature would normally preclude: forecast entire seasons. The results have become so reliable that Germany's National Meteorological Service (DWD), a member organization of ECMWF, now officially offers them for sale. For 150 ($231), companies can now purchase the center's six-month forecast.
The computer still makes significant mistakes, and the information it provides is too vague for purposes like planning vacations. But the data can be of use to business, and the DWD is already advising power companies and municipal utilities. If they know, for example, that the upcoming winter is likely to be colder than usual, these companies can stockpile natural gas reserves for their power plants early on.
The number of economic sectors sensitive to the weather is surprisingly large, from ice cream makers to the textile industry. In the latter case, knowing whether summer temperatures are more likely to create a need for bikinis or windbreakers can be critical.
The DWD's list of customers even includes a manufacturer of mosquito repellant, because mosquitoes are also subject to the weather. The dominant mosquito strains in cool, wet summers are different from those in warm summers, and combating each strain requires a slightly different cocktail of chemicals.
The DWD receives its forecasts from Reading, where the supercomputer is fast enough to digest millions of pieces of observation data. The weather model the computer uses is similar to the one employed for daily forecasts. But a single model would eventually become useless and would only spit out nonsense after a week or two. The meteorologists use a trick to overcome this hurdle: They clone their model and then run simultaneous simulations with multiple clones.
The cast of clones currently consists of 41 members, and each one begins with the weather data for the present. However, because current conditions can never be captured perfectly, each model receives slightly modified initial values. Then the computer simulates an imaginary worldwide weather process. Pressure zones move around the globe hour by hour, snow falls and melts again, and monsoon clouds gather over India at the customary time -- everything is simulated almost exactly as it would be on the real planet.
Of course, the models only coincide at the beginning. They are often noticeably different by the third day, and after three weeks each model is computing away in its own, unique world. In Model 5, all of Germany may be inundated with nonstop rain in June, while Model 12 is predicting the hottest June in years. Meanwhile, Model 23 may have concocted a moody low pressure zone over the British Isles.
Things just get more and more complicated. The meteorologists could watch the models and lose themselves in an endless array of possibilities, but no one is interested in that. "We don't even look at individual calculations," says meteorologist Renate Hagedorn, who works on seasonal prognoses for the DWD in Reading.
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