Risk.net

Editor's Letter

Like all good Brits, I am, of course, obsessed with the weather. This summer has been a particular talking point, as temperatures in the south of Britain reached a record 36 degsC (97 degsF) in July.

Even a short period of temperatures just a few degrees above the norm had an enormous impact. Trains were disrupted, roads melted and even some schools were forced to close. Electrical retailer Currys reported sales of air conditioning units running at two every minute. Environmental groups say these units can double a household's electricity usage.

Although those of you in Southern Europe, Asia and the Americas may find Britain's struggle to cope with 'extreme' temperatures mildly amusing, it does demonstrate the impact temperature has on our society and economy. And, of course, there are few industries more affected by temperature than the energy industry.

Naturally, understanding the relationship between temperature and demand is extremely useful for grid operators, schedulers and traders alike. As Michael Grossmann and Martin Fischer explain, the Holy Grail for grid operators and traders is the ability to be able to use temperature predictions to anticipate how certain future temperatures may impact upon electricity demand variability. Their extremely informative article on page 42 explores this relationship.

Also in this issue, we're very pleased to bring you the first in a series of interviews with chief financial and risk officers at major energy companies and energy-intensive industrials (see page 19). I'd like to thank all our interviewees for being so frank and detailed during their interviews. I think you'll agree that their views and opinions make very interesting reading.

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