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Can Wind Speed Data Really Predict Pattern Energy Earnings?

Mar. 05, 2018 8:27 AM ETPattern Energy Group Inc. (PEGI)59 Comments


  • A model for using wind speed data to predict Pattern Energy power generation is proposed.
  • Results were backtested with 3 years of data and show reasonable agreement between projections and actual data.
  • Earnings report and recent announcements indicate Pattern Energy may have difficulty growing in the near term.

In my previous article, I proposed that monthly average wind speed data available from the National Oceanic and Atmospheric Administration (NOAA) could be a predictor of earnings for Pattern Energy (NASDAQ:PEGI) due to its position as a pure play on wind energy in North America. Thanks to numerous comments from readers, I was encouraged to backtest my model and enhance it to produce a prediction of power generation. In this article, I would like to present my results and add some commentary on the recent earnings report.


Wind speed data was obtained from NOAA monthly average wind speed maps. For each month, two maps are available: a map of the measured average wind speed and a map of the wind speed anomaly. The average wind speed map is exactly what it sounds like: the absolute value of the wind speed in meters/second. The wind speed anomaly map shows how much the average wind speed for that month deviated from long term average wind speeds (over 30 years). Using an image editor, a second layer was added to the map on which was plotted the approximate locations of Pattern Energy wind farms. This layer was then copied onto each map analyzed to maintain consistency. Here is what the maps for January 2018 look like:

Map of average wind speeds for January 2018

Map of average wind speed anomaly for January 2018Source: NOAA, Pattern Energy December 2017 Investor Presentation

Using the legend provided, numerical values were assigned for the average wind speed and wind speed anomaly at each location. If a location was solidly within one color the midpoint of range for that color was used. If a location was on the border between two colors, the value assigned to the transition was used. For locations in Canada values were extrapolated based on nearby wind speed patterns in the U.S.

January 2018 Wind Speed Difference

Source: Author, data compiled from NOAA wind speed maps


This article was written by

Justin Law profile picture
Maximize your income with the world’s highest-quality dividend investments

I am the curator of the Dividend Champions list, a monthly publication of companies with a history of consistently increasing their dividends. My primary investing focus is in deep value and dividend paying stocks, but I am constantly exploring alternative strategies. I have a Ph.D in Chemistry from Rice University and have earned the CFA Institute Investment Foundations certificate. I am a contributor to The Dividend Kings marketplace service.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in PEGI over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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