Following the investigation of risk and its measurement, we start investigating new financial products. in a research done with Prof Liron Yedidsion and master student Roei Feldhaim, we suggest a new warranty insurance that a service provider or a manufacturer sells with the product. This insurance is designed to protect the customer in case of product failure. In this work we show that incorporating such insurance into the product price functions as an optimal quality control forcing the insurance seller to improve his product in order to avoid compensation payments. We summarize our results in the paper “Optimal Service Failure with Protection Plans”.
The electricity and energy generated by renewable energy is dependent on meteorological data such as daily wind flux and pressure, solar illumination intensity and daily average temperature. In order to evaluate the credit risk of a renewable energy investment, we must be able to forecast future temperatures, wind intensity and solar illumination. The annual energy production has to cover the operation capital requirements and expenditure of the generator. Consequently the scientific research in the financing of renewable energy revolves around modeling and analysing mathematically weather time series. In collaboration with Dr. Yaron Rosenstein amathematician and senior data scientist at Provence Investments Ltd, we model average daily temperature fluctuations with chaos based approach for dynamical systems. We assume that the physical motivation is derived by Navier-Stokes-Boussinesq approximation in rotating coordinates. We employed a six dimensional system that forecasts the average temperature for ten meteorological stations. Our forecasts are an order of magnitude more accurate than the reported forecasts in the literature. For further reading please refer to: Nonlinear time series temperature modeling based on normal form. A continuation of this work is to evaluate a weather related security called weather derivative for investors to hedge their investment in renewable energy. Our survival and prosperity will depend on our habits of energy consumption. In the future, I intend to concentrate my research on sustainable and renewable energy financial mechanisms.
