Renewable Generator Hedging Control for Revenue Predictability

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Solution Overview

Problem

Renewable power sources face intermittency issues and price uncertainties, making it difficult to ensure predictable revenues and justify investment in new or expanded renewable generation facilities, which hinders the decarbonization of energy systems.

Innovation Solution

The introduction of systems and methods that use physical and financial instruments to optimize the cash flow of renewable energy generators, determining risk and return metrics and optimizing the size and operation of renewable energy systems with physical and financial hedges across multiple market price scenarios to tailor risk and return utility functions for investors.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Object-affected harmful factors

If renewable energy generation capacity is increased to accelerate decarbonization, then environmental benefits improve, but revenue predictability deteriorates due to intermittency and market price uncertainties

Engineering Contradiction:

Improvedecarbonization progressVSAvoidrevenue predictability

Core Design Contradiction:

Object-affected harmful factorsVSReliability

Solution Approach 1:

The patent introduces energy storage systems as intermediary components between renewable generation and the grid. These storage systems absorb excess generation during high-production periods and discharge during low-production periods, decoupling the intermittency of renewable sources from grid delivery and enabling more predictable revenue streams while maintaining decarbonization benefits

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The patent implements forward-looking optimization that pre-determines operational strategies based on forecasted weather conditions and market prices. By planning ahead and preparing storage capacity in advance, the system can mitigate the impacts of intermittency before they occur, ensuring more stable revenues while maintaining high renewable penetration

Inventive Principle:

Principle #10Preliminary action

2Reliability

If physical and financial hedges are added to offset intermittency and market risks, then revenue stability improves, but system complexity increases

Engineering Contradiction:

Improverevenue stabilityVSAvoidhedge system complexity

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent combines physical hedging (energy storage systems) and financial hedging (contracts and instruments) into a unified optimization framework. This integrated approach manages both types of hedges simultaneously through a single decision-making system, reducing overall complexity compared to managing separate physical and financial hedge systems independently

Inventive Principle:

Principle #5Merging (Combining)

Solution Approach 2:

The patent transforms complex hedge management into optimized parameter selections by using computational models to determine optimal storage capacity sizes, charge/discharge rates, and financial hedge positions. This converts the complex problem of hedge management into manageable parameter optimization, reducing operational complexity while maintaining revenue stability

Inventive Principle:

Principle #35Parameter changes

3Reliability

If forward-looking optimization with multiple scenarios is implemented, then investment attractiveness improves, but computational requirements increase

Engineering Contradiction:

Improveinvestment attractivenessVSAvoidcomputational complexity

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent segments the complex optimization problem into manageable components by considering multiple independent weather and market price scenarios. Each scenario is optimized separately using linear programming, and results are aggregated to provide comprehensive investment analysis. This segmentation makes the computational problem tractable while still capturing the full range of uncertainties

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The patent replaces complex nonlinear optimization mechanics with linear programming formulations. By transforming the optimization problem into linear form, the system achieves computationally efficient solutions that can be implemented in practical decision-making tools, reducing computational barriers while maintaining investment attractiveness through rigorous scenario analysis

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Data Source

PatentUS12061454B1Renewable energy system controls

Publication Date: 2024.08.13 FORM ENERGY INC

AI summary

Physical and/or financial instruments may optimally hedge the cash flow of one or more renewable energy generators based on a desired risk and return profile of renewable infrastructure investors. Baseline revenues may be determined based on forward-looking electricity market price scenarios corresponding to qualified market products intended for sale from the renewable energy generators. Risk and return metrics of cash flows of the renewable energy generators may be determined. At least one physical hedge and/or financial hedge may be added. The size and operation of the renewable energy generators along with any physical hedges, or financial hedges, or both physical and financial hedges, may be optimized across multiple market price scenarios of qualified market products to optimize investor-tailored risk and return utility functions.