WEATHER FORECASTING is a thankless task. Ask the Met Office. It predicted a barbecue summer and a mild winter. We all know how they turned out: a wet summer and the coldest, snowiest winter in decades.
For businesses, getting it wrong can be catastrophic. Supermarkets can be left with tons of overstocked hamburgers, utilities caught out by surges in demand for gas.
Enter Decider, a weather-forecasting program developed at a cost of £40,000 by the Met Office, which says it can beneift any business whose fortunes are linked to the weather: energy groups, commodity traders and even hedge funds.
The government recently put the Met Office up for sale to bolster the public finances and initiatives such as this are designed to burnish its image for potential bidders.
A whizzy new product aimed at sophisticated investors may inspire guffaws. Some, however, are convinced.
Advertisement
"This is the most innovative thing I have come across in a long time," said Dave Parker, head of meteorology at EDF Energy, the utility. "It has revolutionised the way we interpret the weather forecast."
The forecast you get on the morning news is highly simplified. Behind it is a torrent of data that have come in from satellites, ocean buoys, weather stations and rainfall radars. Traditionally this is broken down into 50 different possible outcomes, each with a percentage possibility. What we end up with is a crude average.
Decider, on the other hand, collates raw data to fit into 29 weather "regimes". These give far more detailed pictures that include everything from wind speeds to the likelihood of more extreme activity such as lightning or icing.
The upshot, said Matt Huddlestone at the Met Office, is a more comprehensive, usable set of data that allows, "quick, risk-based decisions". He said: "All that data, the hundreds of graphs, is hard to assimilate. Once traders know what each regime means, they can spot them and act quickly."
The recent snow was a good example. Snow acts as a natural insulator and can increase household temperatures by about half a degree.
Advertisement
Simply seeing the white stuff, however, results in gas demand surging because homeowners turn up their thermostats the moment snow appears.
"We saw it coming," said EDF Energy's Parker. "It wasn't in the forecast but it was associated with one of the predicted regimes. I stuck my neck out a bit and got our traders to adjust their forecasts. We were spot on."
It's a good thing they did. Over last weekend the spot price of gas whipsawed from as low as 40p a therm to 100p and then back down to about 50p as the utilities scurried to top up their supplies.
Ultimately, though, the different regimes are expressed only in percentage likelihoods so, as with traditional weather forecasting, it comes down to a judgment call.
Parker said he doesn't mind a few mistakes "as long as we are generally getting the hit rate right".