Speedwell Weather Topic: Weather Station Installation

1. Speedwell Weather Topic: Weather Station Installation

2. Goal: To ensure 100% accuracy of settlement data Common causes of inaccuracy - Observer failure - Equipment failure (observing or transmission) - Vandalism - Observation tampering Preventing inaccuracy - Observer failure -> duplicate systems (independent observers, equipment) - Equipment failure (observing or transmission) -> backup systems / duplicate systems - Vandalism -> secure sites (physical obstacles) - Observation tampering -> smart observing techniques / duplicate systems The accuracy of settlement data for financial contracts is not a luxury, it is a necessity

3. Speedwell Weather • 10+ years of experience in the weather risk markets • Extensive client list • Global leader for weather risk analysis products • Weather Derivatives pricing software • Data products (feeds / history) - Recalibrated, cleaned, and settlement data • Forecast products • Extensive experience with what clients need to be comfortable with a deal • Independent 3rd party confirmation of observations • Readily accessible observations for tracking a deal and settlement • Transparency of methodology • Expert team of professionals dedicated to meeting the needs of the weather market • Stephen Doherty – Director • Dr. Michael Moreno – Chief software architect / Quant developer • Phil Hayes – Head of data and forecast products • David Whitehead – Director of U.S. Operations

4. Speedwell Weather – Settlement Data Experience • Providing settlement services for numerous companies involved in OTC weather trading • Providing settlement data for the Chicago Mercantile Exchange (CME) • David Whitehead – Project Lead • David has extensive experience with the installation of weather stations and processing of settlement data for weather risk contracts. With a Masters degree in Meteorology coupled with 10+ years of experience in weather risk management he has extensive practical experience and market knowledge. David’s experience includes project management for the installation of weather stations in Malawi, Africa as part of a World Bank Weather Risk program. His participation involved all aspects of the work from equipment recommendation / selection, working with local authorities on land acquisition and physical station installation, processing of observations, and the creation of the final settlement data. • In addition to David’s work on the Malawi project he has been involved • with a similar project in Ethiopia (World Bank) , Chile, and other smaller scale • OTC weather transactions. David and the Speedwell team have • provided significant insight into the creation of settlement data for • the CME’s latest set of weather contracts.

5. Weather Station Installation / Settlement Data (overview) • Clarify project goals • Equipment selection • Equipment procurement • Land rights acquisition • Additional materials procurement • Obtain local labor / site preparation / station installation • Data processing • Site maintenance • Settlement data • Site decommissioning?

6. Weather Station Installation / Settlement Data (key considerations) • Equipment selection • Determining the correct instrumentation for a project must be made • with full understanding of the intended use and site of the • instrument. The World Meteorological Organization (WMO) • instrumentation. • Considerations • Are there meteorologically unique observing obstacles? • - snowfall can be difficult to observe, extreme cold • Does the data quality (QC) control process require certain observation types? • - advanced QC techniques make use of the interrelationship between multiple variables • Is there a high risk of theft? • - instrumentation can be installed on an elevated platform, unique fasteners, fencing, razor wire • What is the expected life span of the instruments? • - temporary installation is different from permanent, if the instruments are permanent who assumes control?, does the assuming agency have a preferred instrument type? • What resources are available? • - Electrical power? GSM cell service? • Clarify project goals • Equipment selection • Equipment procurement • Land rights acquisition • Additional materials • Site / station installation • Data processing • Site maintenance • Settlement data • Site decommissioning?

7. Weather Station Installation / Settlement Data (key considerations) • Equipment procurement • purchase • construction – most systems are not “off the shelf”, typical timing 3-5 weeks • shipment – stations are typically shipped as cargo (slow) • customs – can be a major obstacle – helpful to work with someone domestically • transport – moving stations parts into a remote area requires certain logistics • Land rights acquisition (external to SWD participation) • important to obtain the legal right to install instrumentation • specifics concerning the cost of the lease, who owns the lease, length of lease, must all be considered • Clarify project goals • Equipment selection • Equipment procurement • Land rights acquisition • Additional materials • Site / station installation • Data processing • Site maintenance • Settlement data • Site decommissioning?

8. Weather Station Installation / Settlement Data (key considerations) • Additional materials • Many materials are best obtained domestically – reduces costs and logistics • Fencing – type required • Concrete – cement, sand, water, mixer, frame… • Locks • SIM card • Site preparation / station installation • Labor – local individuals who speak the language and know where to obtain materials are best • task - grading of land • task - pour concrete slab • task - install fencing • task – install station • Clarify project goals • Equipment selection • Equipment procurement • Land rights acquisition • Additional materials • Site / station installation • Data processing • Site maintenance • Settlement data • Site decommissioning?

9. Weather Station Installation / Settlement Data (key considerations) • Data processing • Confirm the transmission and receiving of observations • Site maintenance • It should be assumed that the site will have problems (especially in winter conditions) • Maintenance options • Local assistance (trained observer, equipment manufacturer…) • International assistance positioned locally • International assistance on a need basis • Typical concerns • Freezing of instrumentation • Debris (dust, dirt, leaves) • Insect infiltration • General failure • Replacement sensors must be kept on hand • Clarify project goals • Equipment selection • Equipment procurement • Land rights acquisition • Additional materials • Site / station installation • Data processing • Site maintenance • Settlement data • Site decommissioning?

10. Weather Station Installation / Settlement Data (key considerations) • Settlement Data • Goal: to ensure 100% accuracy of the observations • Step #1 – verify the validity of the observations from the installed stations • surrounding station approach • external observations (satellite observations, RADAR) • comparison against climatology derived from time series of neighboring stations • review of the interrelationship between observed variables • precipitation -> lower solar radiation (clouds) • precipitation -> temperature drop and relative humidity increase • liquid precipitation -> occurs with warmer temperatures • Step #2 – verify the observations for the primary stations / fill missing observations • review the relationship between stations (primary vs. installed) • determine the probability of differences between observations • create estimate values for missing observations • Step #3 – certify settlement observations are correct / deliver to counter parties • Clarify project goals • Equipment selection • Equipment procurement • Land rights acquisition • Additional materials • Site / station installation • Data processing • Site maintenance • Settlement data • Site decommissioning?

11. Equipment Recommendations • Manufacturers of instrumentation • All Weather, Inc. • focused on aviation systems • Campbell Scientific, Inc. • good reputation • cold weather specific instrument packs • Casella CEL • used for World Bank project • highly recommended (Dave W) • lacking cold weather • Coastal Environmental Systems • focused on systems for the U.S. government • Davis Instruments Corp. • inexpensive solutions for private use • Vaisala • one of the largest suppliers of weather instruments • specifically designed cold weather instrument packs Note: the ability to observe liquid equivalent precipitation is a unique variable type not supported by all vendors Campbell Scientific – Cold Region Research ETI Instrument Systems, Inc. All-weather precision precipitation gauge is a good example of specialized instrument that will perform well in prolonged winter conditions.