By Jeanne Hedden Gallagher and Dana Yamashita

Collecting, and using, renewable energy has been in place for decades, but currently only about 11% of U.S. energy consumption comes from renewable energy. In part, that may be because relying on wind and solar energy seems much riskier than the traditional sources: natural gas, coal, petroleum, and nuclear power.

With support from the U.S. Department of Energy (DoE), Aparna Gupta, associate professor of quantitative finance in the Lally School of Management at Rensselaer, is leading a project to develop risk management tools to make it easier for renewable energy producers to more actively participate in energy markets. And, for end users, this will translate to the benefits of reliable, inexpensive energy renewable.

“By borrowing concepts from finance to break the risks inherent in using solar and wind for power into segments, we will be able to establish mechanisms by which renewable generators can assess their risks, price their risks to participate in the market, and still realize value while ensuring the demands and needs of the users are met,” Gupta said.

This project — which includes Joe Chow, Institute Professor of electrical, computer, and systems engineering; Koushik Kar, professor of electrical, computer, and systems engineering; and Kristen Schell, assistant professor of industrial and systems engineering — hopes to design “new concepts and methods to improve the efficiency of energy in ways that could mean a savings of more than $100 million per year in New York.”

The $2.66 million, three-year grant from the DoE represents the collaborative nature of Rensselaer using faculty from both the Lally School of Management and the School of Engineering. Other collaborators are from Sandia National Laboratories, North Carolina State University, and Underwriters Laboratories. Providing advice based on their end-user commercial energy network are members from the New York Independent System, the Electric Reliability Council of Texas, and the Public Service Company of New Mexico.