Speedwell WeatherTopic: Weather Station Installation

Speedwell Weather

•10+ years of experience in the weather risk markets•Extensive client list

•Global leader for weather risk analysis products • Weather Derivatives pricing software• Data products (feeds / history) - Recalibrated, cleaned, and settlement data • Forecast products

•Extensive experience with what clients need to be comfortable with a deal• Independent 3rd party confirmation of observations• Readily accessible observations for tracking a deal and settlement• Transparency of methodology

•Expert team of professionals dedicated to meeting the needs of the weather market• Stephen Doherty – Director• Dr. Michael Moreno – Chief software architect / Quant developer • Phil Hayes – Head of data and forecast products• David Whitehead – Director of U.S. Operations

Speedwell Weather – Settlement Data Experience

•Providing settlement services for numerous companies involved in OTC weather trading•Providing settlement data for the Chicago Mercantile Exchange (CME)

•David Whitehead – Project LeadDavid has extensive experience with the installation of weather stations and processing of

settlement data for weather risk contracts. With a Masters degree in Meteorology coupled

with 10+ years of experience in weather risk management he has extensive practical

experience and market knowledge. David’s experience includes project management for the

installation of weather stations in Malawi, Africa as part of a World Bank Weather Risk

program. His participation involved all aspects of the work from equipment

recommendation / selection, working with local authorities on land acquisition and physical

station installation, processing of observations, and the creation of the final settlement data.

In addition to David’s work on the Malawi project he has been involved

with a similar project in Ethiopia (World Bank) , Chile, and other smaller scale

OTC weather transactions. David and the Speedwell team have

provided significant insight into the creation of settlement data for

the CME’s latest set of weather contracts.

Weather Station Installation / Settlement Data (overview)

• Clarify project goals• Equipment selection • Equipment procurement• Land rights acquisition• Additional materials procurement• Obtain local labor / site preparation / station installation• Data processing• Site maintenance• Settlement data• Site decommissioning?

Weather Station Installation / Settlement Data (key considerations)

Equipment selection

Determining the correct instrumentation for a project must be made

with full understanding of the intended use and site of the

instrument. The World Meteorological Organization (WMO)

instrumentation.

Considerations• Are there meteorologically unique observing obstacles?

- snowfall can be difficult to observe, extreme cold

• Does the data quality (QC) control process require certain observation types?- advanced QC techniques make use of the interrelationship between multiple variables

• Is there a high risk of theft? - instrumentation can be installed on an elevated platform, unique fasteners, fencing, razor wire

• What is the expected life span of the instruments?

- temporary installation is different from permanent, if the instruments are permanent who

assumes control?, does the assuming agency have a preferred instrument type?

• What resources are available?- Electrical power? GSM cell service?

Clarify project goals

Equipment selection

Equipment procurement

Land rights acquisition

Additional materials

Site / station installation

Data processing

Site maintenance

Settlement data

Site decommissioning?

Weather Station Installation / Settlement Data (key considerations)

Equipment procurement• purchase • construction – most systems are not “off the shelf”, typical timing 3-5 weeks• shipment – stations are typically shipped as cargo (slow)• customs – can be a major obstacle – helpful to work with someone domestically• transport – moving stations parts into a remote area requires certain logistics

Land rights acquisition (external to SWD participation)• important to obtain the legal right to install instrumentation• specifics concerning the cost of the lease, who owns the lease, length of lease, must all

be considered

Clarify project goals

Equipment selection

Equipment procurement

Land rights acquisition

Additional materials

Site / station installation

Data processing

Site maintenance

Settlement data

Site decommissioning?

Weather Station Installation / Settlement Data (key considerations)

Additional materials• Many materials are best obtained domestically – reduces costs and logistics

• Fencing – type required• Concrete – cement, sand, water, mixer, frame…• Locks• SIM card

Site preparation / station installation• Labor – local individuals who speak the language and know where to obtain materials

are best• task - grading of land• task - pour concrete slab• task - install fencing• task – install station

Clarify project goals

Equipment selection

Equipment procurement

Land rights acquisition

Additional materials

Site / station installation

Data processing

Site maintenance

Settlement data

Site decommissioning?

Weather Station Installation / Settlement Data (key considerations)

Data processing • Confirm the transmission and receiving of observations

Site maintenance• It should be assumed that the site will have problems (especially in winter conditions)• Maintenance options

• Local assistance (trained observer, equipment manufacturer…)• International assistance positioned locally• International assistance on a need basis

• Typical concerns• Freezing of instrumentation• Debris (dust, dirt, leaves)• Insect infiltration• General failure

• Replacement sensors must be kept on hand

Clarify project goals

Equipment selection

Equipment procurement

Land rights acquisition

Additional materials

Site / station installation

Data processing

Site maintenance

Settlement data

Site decommissioning?

Weather Station Installation / Settlement Data (key considerations)

Settlement Data

Goal: to ensure 100% accuracy of the observations

Step #1 – verify the validity of the observations from the installed stations• surrounding station approach• external observations (satellite observations, RADAR)• comparison against climatology derived from time series of neighboring stations• review of the interrelationship between observed variables

• precipitation -> lower solar radiation (clouds)• precipitation -> temperature drop and relative humidity increase• liquid precipitation -> occurs with warmer temperatures

Step #2 – verify the observations for the primary stations / fill missing observations• review the relationship between stations (primary vs. installed)• determine the probability of differences between observations• create estimate values for missing observations

Step #3 – certify settlement observations are correct / deliver to counter parties

Clarify project goals

Equipment selection

Equipment procurement

Land rights acquisition

Additional materials

Site / station installation

Data processing

Site maintenance

Settlement data

Site decommissioning?

Equipment Recommendations

Manufacturers of instrumentation• All Weather, Inc.

focused on aviation systems• Campbell Scientific, Inc.

good reputation cold weather specific instrument packs

• Casella CEL used for World Bank project highly recommended (Dave W) lacking cold weather

• Coastal Environmental Systems focused on systems for the U.S. government

• Davis Instruments Corp. inexpensive solutions for private use

• Vaisala one of the largest suppliers of weather instruments specifically designed cold weather instrument packs

Note: the ability to observe liquid equivalent precipitation is a unique variable type not supported by all vendors

Campbell Scientific – Cold Region Research

ETI Instrument Systems, Inc.

All-weather precision precipitation gauge is a good example of specialized instrument that will perform well in prolonged winter conditions.