The value of W&CS

The number of climate services products that have been developed over the past years has increased substantially, for example in Europe the climate services market reached nearly EUR 5 billion in 2015 – 2016. The largest share of purchased climate services (almost 24 %) in 2015 – 2016 is advisory services, risk assessments and decision support tools (Cortekar et al., 2018, Poessinouw, 2016).

On the other hand, not investing in W&CSs for the energy industry can be costly, as outages due to power overload or damage in infrastructures that fail to be weather-ready can create customer dissatisfaction. More importantly, under extreme weather conditions could lead to lack of electricity for critical use such as in hospitals, emergency respondents, city lighting, and for population livelihood. In turn, this can lead to human life and economic losses.  

Most of the investments in W&CSs are resulting from programmatic investments from bilateral or multilateral funders. Whilst there is a significant level of uncertainty on the actual size of the climate service market at the moment, it is clear that this is rapidly increasing in size, helped by a change in legislation and regulation, also related to the reporting needs by companies as highlighted by the Task Force on Climate-related Financial Disclosures (TCFD, 2022).

The World Bank estimates that additional investments beyond those already programmed of up to USD 2 billion are needed to create capable and fully equipped national institutions, to deliver timely, reliable climate, weather and water information and services relevant to policy and decision-making (WMO No. 1242, 2019).

Although difficult to set a monetary value, weather and climate forecasts can help inform fair energy prices. While policies and regulations are also needed for responsible price formation and valuation, forecasting supply and demand can certainly play a key role in such decisions. There is a need for organized markets reflecting state policies; pricing mechanisms for maintaining resource adequacy; and regulatory bodies overseeing pricing and operation of distributed energy resources (DERs), storage, and microgrids; the role of aggregators; and mechanisms for implementing consumer protection across the various markets and jurisdictions (WMO SG-Ene, 2022).