Beyond skill scores: exploring sub‐seasonal forecast value through a case‐study of French month‐ahead energy prediction

Journal article

We quantify the value of sub‐seasonal forecasts for a real‐world prediction problem: the forecasting of French month‐ahead energy demand. Using surface temperature as a predictor, we construct a trading strategy and assess the financial value of using meteorological forecasts, based on actual energy demand and price data. We show that forecasts with lead times greater than two weeks can have value for this application, both on their own and in conjunction with shorter‐range forecasts, especially during boreal winter. We consider a cost/loss framework based on this example, and show that, while it captures the performance of the short‐range forecasts well, it misses the marginal value present in medium‐range forecasts. We also contrast our assessment of forecast value to that given by traditional skill scores, which we show could be misleading if used in isolation. We emphasise the importance of basing assessment of forecast skill on variables actually used by end‐users.

Authors: Dorrington, J; Finney, I; Palmer, T; Weisheimer, A

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Wiley
• Journal: Quarterly Journal of the Royal Meteorological Society
• Volume: 146
• Issue: 733
• Pages: 3623-3637
• Publication date: 2020-08-03
• Acceptance date: 2020-06-23
• DOI: 10.1002/qj.3863
• EISSN: 1477-870X
• ISSN: 0035-9009
• Language: English
• Keywords: forecasting; applications; energy; sub‐seasonal prediction; FFR