Published on January 10th, 2014 | by Zachary Shahan58
Deceiving EIA Forecasts (Letter From CleanTechnica Readers)
The following is an open letter a few CleanTechnica readers wrote, after discussing recent EIA forecasts down in the comments section. As you’ll see, it’s in response to some absurd forecasts regarding US renewable energy adoption. Here’s one highlight:
it was forecast that we would reach 0.45 GW of Solar PV on the grid by 2035, in November 2013 we reached 7.11 GW according to the FERC.
Surely, in making new predictions it would be appropriate for the EIA to address how their models could produce a 25 year forecast which has already been surpassed 16 times over in less than 3 years.
Anyway, below is the letter, followed by some renewable energy charts I’m adding and some additional commentary.
To Dr Ernest Moniz,
US Secretary of Energy
Dear Secretary Moniz
We are a group of concerned individuals with an interest in the future of our energy supply. We are aware of the importance of accurate data and forecasts in order to understand energy trends and shape future energy policy. After reading the recently released EIA Annual Energy Outlook 2014, we found it contains a number of forecasts which concern and surprise us.
Here is the Figure outlining the long term forecast under the AEO 2014 reference case for US grid power:
We were surprised to see that the DOE/EIA expects renewables to gain only a further 4% share of total electricity generation and reach only 16% of the total by 2040. That suggests an average annual increase of ~0.1% of the total demand annually by all renewables.
Consider that wind alone moved from 3.5% to over 4.5% of the total US electricity supply this last year according to EIA EPM data. Over 1% in one year from one technology. Solar is similarly starting to see accelerated installation rates, albeit from a lower base.
Considering that coal plant construction has slowed to a crawl with a paucity of projects in a long development pipeline, nuclear plant construction is sparse, and existing coal and nuclear plants closures are accelerating, it’s hard to see how they maintain such large shares and renewables gain so little.
When we look at the EIA predictions for individual non-hydro renewables it becomes clear how the low combined forecast arose. Note that none of these components or the forecasts made about them have been mentioned in any way in the discussion of the report. One has to delve deep into the interactive data browser to discover any of this.
AEO 2014 forecasts for individual non-hydro renewable technologies;
PV Solar installations stop in 2016 and do not resume for 12 years and even then at a rate significantly below current rates.
No thermal solar is constructed past 2014.
Construction of wind farms ceases in 2016 and does not resume for almost 20 years.
Municipal waste generation capacity additions grind to a halt in two years, never to occur again.
Wood and biomass suffer a similar fate.
We find it highly unusual that 5 statistical models using 5 data samples regarding 5 different energy technologies at varying levels of economic and technological maturity could produce such strikingly similar results. The implication is that the EIA’s official position is that all the major non-hydro grid-scale renewables will see 1-2 further years of capacity growth followed by 15-27 years of no further installations.
To provide further context on one of these technologies and the forecast for its future in the report, we know from the FERC Energy Infrastructure Reports that 2.63 GW of utility-scale Solar PV has been added to the US grid in the first 11 months of 2013. The AEO 2014 would have us believe that over the next 27 years only a further 10 GW will be added, an average of only 0.37GW per year, including a 12-year hiatus from 2015 to 2027 where no solar PV whatsoever is added.
Surely, if the EIA stands by these forecasts of dramatic and sudden deviations from accelerating trends in grid-scale renewable installations, they would warrant graphical publication in the report with an accompanying discussion justifying them?
At present, they are essentially hidden, hard to find for even those with a keen interest in the subject.
We also feel that the EIA has made thousands of forecasts in the past which never seem to be publicly visited again, for example in the 2010 AEO it was forecast that we would reach 0.45 GW of solar PV on the grid by 2035, in November 2013 we reached 7.11 GW according to the FERC.
Surely, in making new predictions it would be appropriate for the EIA to address how their models could produce a 25 year forecast which has already been surpassed 16 times over in less than 3 years. What changes have been made to the models to improve this terrible forecasting record? If none, then should the renewable forecasts come with a disclaimer that they are highly unreliable and have a history of massive underestimation of renewable growth, surely burying them deep in the data of the report is not an appropriate strategy.
Do the EIA and the DOE really stand by this report and its predictions as quality forecasts with a high probability of accurately representing future trends? We find it overwhelmingly unlikely that solar PV will soon simply stop being installed for 12 years given recent dramatic price decreases and acceleration of installations, yet the EIA report will allow a congress member to stand up and ask why the government is supporting a technology that is so uneconomical that the EIA believes it will be 12 years before any further installations will occur. We feel the other technologies we have mentioned are similarly highly pessimistically represented by this report.
We ask you to review these forecasts and question whether the DOE stands by them or whether they require significant review and revision before being fit for public release as the official forecast of the DOE.
Dennis Heidner, Bob Wallace, and RobS
That doesn’t look like it’s going to flatline, does it?
Addendum/Update following some discussion with experts on Twitter: So, what is the underlying issue with the EIA’s forecasts? The key issues are the assumptions. One of the most important assumptions is that they don’t include any changes in policy going forward. (Meaning, policies in place today remain in place until they expire… and then no new policies are added.) So, fossil fuels and nuclear keep their subsidies (which are written into the tax code and don’t expire), but renewables lose theirs within a couple of years or so and then never regain them again, and never get any policy support again. This results in pretty good base forecasts off of which other forecasts based on different policy scenarios can be built, using a variety of different policy assumptions, but it also means that no responsible person or media outlet should treat the base EIA forecast as being anything close to what will happen in reality.
Furthermore, beyond the no-policy-change assumptions, the EIA uses a number of rather questionable cost and integration assumptions. These assumptions negatively impact the renewable energy forecasts. But that’s obviously a more complicated matter for a separate, longer discussion.
In the end, the biggest issue seems to be this: the mass media often reports on and references these EIA forecasts as if they are actual forecasts for what will occur in the future. This results in massive misinformation spreading far and wide. Part of the blame is certainly on the mass media, but part of the blame is also on the EIA for not being very clear about this when presenting its “forecasts” and sharing them with the public and media. For example, in the executive summary of the early release of the Annual Energy Outlook 2014, it is written that the projections are made “under the assumption that current laws and regulations remain generally unchanged throughout the projection period.” That can easily be read as saying that, when the laws expire, the EIA is assuming that the laws are renewed and continue as they are set today. But it actually means that there will be no laws renewed and no new laws supporting renewable energy development will be enacted, which is completely unlikely to happen. A member of the mass media could very easily misunderstand that line… if they look at it at all.
And, again, there are a number of other technical assumptions that are very questionable and counter to renewables.
The end point: don’t treat the EIA’s Annual Energy Outlook base case projections as actual, realistic projections. They are primarily useful for forecasters as building blocks for their own more realistic forecasts.