Clean Power

Published on January 10th, 2014 | by Zachary Shahan


Deceiving EIA Forecasts (Letter From CleanTechnica Readers)

January 10th, 2014 by  

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

US solar power growth

US wind power growth



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.

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About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

  • MrL0g1c

    Here’s a question, how do I place a bet with the EIA that their figures will be grossly underestimated for renewables growth, I’d like some easy money.

  • Bob_Wallace

    Thanks. Things have certainly been a mess in Australia.

    Terrible decision to spend so much money on their grid like they did. I don’t know if that seemed like a good idea at the time or was simply a bad idea that someone pushed through.

    Now AU has a government that seems more like it’s run by coal interests than in Australia’s interest.

  • Renewable Search

    Thank you Dennis, Bob and Rob. Are there any updates to this? I am amazed, but not surprised that the EIA seems to have an anti renewables policy. Another issue is their LCOE, whch is also cited by the nuclar and fossil fuel folks. The interesting thing is that as you know, LCOE depends very much on capacity factors. The EIA only has actual renewable generation data for the last 4 months of 2014. No summer months for solar are included. It’s appauling that this info is available from other sources, but the EIA, who are responsible for supposed impartial reporting, don’t have this info. My guess is they held out as long as they could, because a full year of renewable stats won’t make nuclear and FF’s look good.

    Also, the EIA now has an interesting manipulation of data in the form of LACE, because LCOE doesn’t seem to work for them.

    Thank you guys. Also, we could sure use your help having discussions with the nuclear and FF proponents on the Ecowatch pages. It’s just me and one other guy against a dozen highly organized trolls.

    Thanks again.

    • Bob_Wallace

      ​EIA short term predictions for wind and solar look on the low side to me. Only a 20% increase in solar in 2015 over 2014. 5% for wind.

      The short term predictions cover only 2015 and 2016. They don’t cover the years in which the EIA has predicted no new wind, solar and biogas increases. We’ll have to wait for their annual report to see if they are sticking with their foolishness.​

      • Renewable Search

        Simply amazing.

        • Bob_Wallace

          Here’s my guess. On the way out Cheney planted some fossil fuel loyalists in the office that makes the EIA predictions.

          I can think of no other explanation other than communicable mental illness. ;o)

          • Renewable Search

            That, and maybe the Koch brothers are running the EIA.

    • RobS

      The update is that we now have the full year data for 2014 to compare the short term prediction in the 2014 AEO to and we have the 2015 AEO now to see whether they have seen the error of their ways. Solar the 2014 AEO forecast would generate 10,180 gWh in 2014 the final number was 15,874 which the 2014 AEO didn’t forecast solar generation would reach until 2030, ie. it took one year for solar generation to reach a level they forecast in March 2014 it wouldn’t reach until 2030. The 2015 AEO is also now out and once again they are forecasting stalls in all major renewables resulting in effectively zero installations between 2016 and 2030 for most technologies. Thinkprogress has already released an article rubbishing its findings and previous AEO’s, they really just sound like shills for fossil fuel interests or totally naive to the unfolding energy revolution.

  • NoBigGovDuh
  • Sid

    Bob Wallace, I don’t work for EIA.

    RobS, I believe you should have been clearer on this point in your letter then. The terms appear to have been used interchangeably. Yes, the political impacts can be very real. EIA is supposed to be “projecting” to avoid biased results for this very reason.

    • Bob_Wallace

      Don’t take the “your” personally.

  • TCFlood

    This is a wonderful and important letter you have produced.

    The loss of EIA’s credibility is a serious problem. I have always told friends, colleagues, students – anyone – that the EIA, while constrained to not project policy and while not perfect, was the best place to get data on anything related to energy since almost any other source would incorporate spin factors of unknown magnitude. Now I see that the EIA has its credibility problems as well.

    In addition, my impression of the IEA (sic) is that it is a lackey of the petroleum industry (North America will become a net exporter of oil?), so they are pretty much useless.

    From now on I think I need to say that the EIA is the place to find the most reliable information on current and past energy-related data, but because of constraints on the assumptions they can make, any predictions/projections/forecasts they make are completely worthless and should be ignored.

    Does anyone know of any reason to question the first part of that assertion? Are there significant errors or biases even in past and current data reporting at the EIA?

    • Bob_Wallace

      I’ve never seen anyone challenge the accuracy of the EIA’s data.

      I think they have a problem in one “office”. Their prediction office seems to be either unaware or ignoring data provided by other DOE/EIA offices.
      And it seems to be devoid of common sense. If you’re going to fake up data in order to support some agenda you might have you don’t take the slope of five different technologies to zero and keep them there for over a decade. That’s too obvious.

      • RobS

        I think its even more contained than their entire prediction office. Looking at the EIA STEO they project we will have 0.492 quadrillion BTU of solar generation in 2015. The AEO predicts only 0.15 QBTU in 2015 and even more ridiculous predicts reaching only 0.37 QBTU by 2040. The EIA STEO forecasters think we will easily surpass the AEO 2040 prediction by 2015. It seems that the truly stunning low ball estimates are not EIA wide but specific to the AEO guys.

        • Bob_Wallace

          For folks following along…

          STEO – Short-Term Energy Outlook – a near future EIA outlook

          AEO – Annual Energy Outlook

          The STEO folks are saying 0.309 QBTU of solar in 2013 and 0.410 by 2014. They’re going past the AEO 2040 prediction this year.

          Interestingly they see hydro, wind and solar as the big growers with fossil fuels stalling out in 2015.

          • TCFlood

            Have you gotten any acknowledgment or reply from anyone at the EIA about this? I hope you actually sent it to them in addition to posting it here.

  • Larry

    The EIA has obviously done a pathetic job of ground truthing their forecasts. When a report produces information which is as far off base as this one is, it’s entire content has lost credibility.

  • tibi stibi

    the fun thing of solar power is there are build many factories which produce solar power panels. these will keep on producing and will sell what they produce with or without any governmental policy.

  • Matt

    The one big chart this letter is missing is the EIA forecasts from the last 15-20 years plotted with what really happened. Just to make it clear how wrong they have been in the past on an green power (except maybe large hydro).

    • Bob_Wallace

      wrong spot…

      • OneHundredbyFifty

        I did projections around 2002 / 2003. They were about right, EIAs were way off. A newbie at the time, I was astonished at how disconnected they were from the reality of the PV industry. With growth increasing to the 30% – 40% range they were still using 14% that had characterized the 80’s.

    • RobS

      I did consider it but on starting to put it together found it was a fairly laborius task to construct and the lead time is still fairly short as the renewable “explosion” is still only 3-5 years old. There is also a huge amount of data points and choosing the best way to represent the data is not as simple as it sounds. My idea was to chart the AEO 5 year predictions starting in 2000 for installed solar capacity then starting in 2005 chart the actual installed solar capacity, this would give you 8 comparison points.

    • RobS

      Ok bit the Bullet and put it together, the Blue line is the forecast for that year made in the AEO 5 years earlier, the Red line is the actual installed capacity at the end of that year all data from the EIA. YOu can see that the wheels fell of with the 2005 AEO for forecasts from 2010 on. In fact the 2013 error is even larger because the actual installations here are from the end of November not December.

      • Bob_Wallace


        I suspect it’s understandable that they might not have seen the impact of rapidly falling panel prices before they fell, but by now they should be aware of how far off their 2011 and 2012 forecasts were and started to adjust.

        • RobS

          Yes you would think they would do “post game analysis” on previous predictions in order to ascertain the fidelity of their models, however if they did you would think they would be revising their renewable models to give them more upside bias to match recent trends, yet the AEO solar prediction has been decreased on last years. They either truly believe renewables are about to crash and burn and the last three years is a statistical aberration, are unaware of the error in their forecasts or they simply don’t care enough to make the adjustments.

    • RobS

      Here are two more for wind and total renewables, same methodology. Less dramatic but shows the same trend of long term and increasingly innaccurate forecasts.

  • Sapir-Whorf

    Federal Tax credit goes from 35% to 10% on January 1, 2017 and with a Debt to GDP > 100%, there is little political will to maintain or even increase incentives at current levels. With Utility Scale Solar at < $2.00 an installed watt and Utility Scale Wind almost competitive, my advice to the clean power advocates it to now advocate for a more rifle shot approach versus the shotgun approach that has been the current norm. With Rooftop Solar at still greater than $4.80 an installed watt, it is almost 2.5 times the cost of utility scale PV, completely on life support of the Federal Tax Credit and Retail Price Net Metering. I know the abandonment of rooftop solar and Utility CSP is totally anathema to some advocates, but to be intellectually honest, should we not support and maximize only the most efficacious cost effective clean energy in order to convert to a cleaner powered economy? Incidentally, is not utility scale the more egalitarian approach since individuals, sometimes 1% tax bracket types, the beneficiaries of the rooftop market? What would be wrong with advocating a 20-25% PV and Wind Utility Tax Credit starting January 1, 2017 and letting all others lapse to 0%?

    • Bob_Wallace

      You got some things a big right. Federal subsidy is 30%, not 35%.

      It’s not that there’s little political will to continue subsidies, it’s just that they’ve almost finished their work and aren’t so much needed going forward.

      You’re high on rooftop solar. The average price was $3.96/w Q3, 2013. Should be down some lower now. And it certainly doesn’t cost 2x the retail price of electricity on average. In parts of the US rooftop solar is cheaper than electricity from the grid. It has yet to reach grid parity in the states with the cheapest electricity.

      At $3.96/w (no subsidies) solar would produce electricity for about 16 cents in the middle of the country. For about about 13 cents in the sunny SW. Some of our states have 16 cent or higher electricity. The national average is 12.3 cents.

      Now, we do need to get our cost of roof-top down. Germany, the UK and Australia are installing for about $2/watt.

      CSP – do you mean concentrated solar (lenses/mirrors and panels) or are you talking about thermal solar? If lenses/mirrors and panels, that’s a developing technology and we don’t yet know whether it will cost out. Solar thermal with storage is looking like it might be a good/competitive way to supply peak demand after PV solar has dropped out for the day.

      Both of these technologies are fairly experimental. We aren’t installing them at large scale, we’re building a few plants in order to see if we can make them players.

      The top 1% spend so little of their total income on electricity that they could install rooftop solar and never notice the change in the change in their pockets. The people who really benefit by rooftop solar are Americans with tighter budgets. They can install solar today and lock in a good price for electricity for the next 30, 40, more years.

      The reason we shouldn’t drop subsidies for thermal solar, tidal, wave and other less well developed renewables is that we don’t yet know how useful they will be.

      Imagine entering retirement paying the cost of electricity of 20 years ago and knowing that it won’t get any more expensive for the rest of your life.
      Were we to build a grid on nothing but wind and solar we would need a bunch of storage to fill in the non-windy, non-sunny hours. Let’s say wind costs 5 cents and we can store it for 7 cents. If we can produce electricity from tidal, wave or something else for under 10 cents then that’s a money saver.

      And rooftop solar has a big advantage that utility scale solar doesn’t have. It’s spread all over the grid’s territory. That means that passing clouds are less disruptive than when a cloud can take out a large solar farm all at once. Plus that distributed solar gets used right in the neighborhood in which it is generated, taking transmission and distribution loads off the grid.

    • Matt

      There is lot of political will to maintain tax support that coal, oil, gas. They take a much bigger bite of your tax dollars, and have been sucking from the fed for much longer. They just had enough $ to get their treats into the permanent code. The reason people push for roof top is there is a large benefit to making the power were you use it, no transmission needed. It is not the 1% types that are installing roof top solar. Now I would agree we would be better to change the tax benefit cash refund, so non-profits and schools could use it. Trying to find someone to buy the tax credit at pennies on the dollars is a direct kick back to the 1%’ers.

      • Sapir-Whorf

        Can you site specifically the coal, oil, and gas tax credits, just so I know? I do know they are allowed to depreciate their cash expenses in mineral leases. I think a business that installs solar and wind is also allowed to depreciate its investment power equipment and take the 35% Federal Tax Credit? Is this not the same thing? Rooftop power producers want to sell their produced power at retail prices, contributing nothing to the grid and putting an additional burden on non-solar uses. Even the California legislature recognizes that lower income home owners may end up subsidizing the grid for higher income. This is not my data but verifiable facts that are being debated. The most egalitarian approach is Utility Scale PV support. If you want to put a solar panel on your home and produce your own power, go for it, but other tax payers should not have to support you through federal tax credits and retail net metering regardlesss of your tax bracket.

        • Bob_Wallace

          I gave you the information for coal.

          Just a note on accelerated depreciation. That means that the company can write off their capital expenses faster than the standard rate. It doesn’t mean more write off, just means getting tax cuts sooner than later.

          Here’s information on oil subsidies –

          “The Center for American Progress has repeatedly in the last year scrutinized the hidden world of oil and gas tax subsidies, emphasizing that they represent wasteful government spending. Here’s a summary of the major oil and gas tax breaks and their cost to taxpayers:[1]

          Percentage depletion ($11.2 billion over 10 years)

          Companies are generally allowed to deduct the costs of an investment over the term of that investment’s useful life. But oil companies get to use a special method for calculating their deductions called “percentage depletion.” Instead of deducting the costs of an oil or gas well as its value declines, oil companies are allowed to deduct a flat percentage of the income they derive from it. Because the deductions are based on revenues, not costs, the subsidy actually increases at times when prices are high, which of course is when oil companies enjoy their greatest profits.[2]

          The oil and gas industry maintains that this is not a special tax break because other companies receive similar deductions. But the percentage depletion method permitted for oil and gas is fundamentally different and more favorable. In some cases, it can eliminate all federal taxes for these companies. Moreover, percentage depletion is a poorly designed subsidy because it “doesn’t specifically target hard-to-find or difficult-to-extract oil,” as CAP’s Richard Caperton and Sima Gandhi have written.

          Domestic manufacturing deduction for oil production ($18.2 billion over 10 years)[3]

          Oil producers successfully lobbied for inclusion in a 2004 bill that gave the beleaguered manufacturing sector a special tax break designed to discourage outsourcing of jobs. For a number of reasons—including the capital-intensive nature of oil production, the relative mobility of investments, and of course the level of profitability—there are vast differences between the oil industry and traditional U.S. manufacturing. As Sen. Bob Corker, a Tennessee Republican, has explained: “Congress was trying to solve a manufacturing issue in this country” by enacting the deduction and included oil producers “almost inadvertently.”[4]

          Whatever rationale there was for allowing oil producers to claim the manufacturing deduction has evaporated in the intervening time, as oil prices have nearly tripled. Eliminating oil producers from a benefit never intended for them “will have no effect on consumer prices for gasoline and natural gas in the immediate future,” and is unlikely to have any effect over the long run, according to a recent report by Congress’s Joint Economic Committee.

          Expensing of intangible drilling costs ($12.5 billion over 10 years)

          Another special tax rule dating back to 1916 permits independent oil companies (and major integrated oil companies to a lesser but still significant extent) to “expense” certain costs associated with drilling oil wells. This means they can take immediate deductions for these costs rather than spreading the deductions out over the useful life of the wells, which is the normal tax code rule for other types of investments. Taking deductions immediately means the companies lower their tax bill in the first year, in effect getting an interest-free loan from the government.

          “Dual capacity taxpayer” rules for claiming foreign tax credits ($10.8 billion over 10 years)

          Our tax system allows companies that do business abroad to reduce from their tax bill any income taxes paid to other governments. The rules are supposed to prevent oil companies from claiming credit for royalty payments to foreign governments. Royalties are not taxes; they are fees for the privilege of extracting natural resources.

          Notwithstanding these rules, so-called “dual capacity taxpayers,” which are overwhelmingly oil companies, have been permitted to claim credits for certain payments to foreign governments, even in countries that generally impose low or no business tax (suggesting that these payments, or levies, are in fact a form of royalty).[5] Dual capacity taxpayer rules, therefore, are a subsidy for foreign production by U.S. oil companies. President Obama and others have proposed limiting the tax credit for these companies to what it would be if they did not have the special “dual capacity taxpayer” status.

          Amortization of geological and geophysical expenditures ($1.4 billion over 10 years)

          Another way many oil producers get to postpone their tax liability is by writing off the costs of searching for oil over an accelerated time period of two years. The president has proposed that all oil companies write off these costs over seven years, a relatively minor tax change that would have a negligible impact on investment decisions. According to the Congressional Research Service: “If the industry were experiencing a time of stagnant oil prices that were near the cost of production, relatively small changes in tax expenses might affect investment and production activities. However, in a time of high and volatile oil prices, small changes in tax expense are overshadowed by price variations.”[6]

          “Last-in, first-out” accounting for oil companies (as much as $22.5 billion over 10 years)[7]

          A tax accounting method known as “last in, first out,” or LIFO, provides a significant tax benefit for oil companies, especially when prices are rising. LIFO allows oil companies to calculate profits based on the cost of the oil they most recently added to their inventory. Since the most recently acquired inventory costs the most when prices are rising, this method can minimize a company’s taxable income. LIFO is available to businesses in other industries but large oil companies are perhaps the biggest beneficiaries.[8]

          Taken together, these oil and gas tax subsidies represent a colossal waste of taxpayer resources since they pay companies, in the form of tax breaks, to do what they do anyway—especially at a time of price-fueled record profits.

          American consumers have for years been waiting for the benefits of these tax subsidies to trickle down to them in the form of lower gas prices. It hasn’t happened. In fact, these subsidies existed during the 2008 oil shock when prices hit a record $147 per barrel, yet did nothing to lower oil prices or increase production. And repealing them won’t increase prices at the pump. “Gasoline prices are a function of world oil prices and refining margins,” explains Severin Borenstein, co-director of UC-Berkeley’s Center for the Study of Energy Markets. Any incremental impact on production “will have no impact on world oil prices, and therefore no impact on gasoline prices.”

          Oil tax subsidies are simply a waste of taxpayer dollars. Oil and gas companies, like all companies, make investment decisions based on the profit potential. Those decisions are driven primarily by market conditions, including the price of oil on world markets, not marginal tax incentives.

          “With $55 oil we don’t need incentives to the oil and gas companies to explore,” said President George W. Bush in 2005. “There are plenty of incentives.”

          Oil prices today are double what they were then. It’s time to stop giving away tax dollars to some of the world’s most profitable companies.

          Seth Hanlon is Director of Fiscal Reform for CAP’s Doing What Works project.


          [1]. There are also several other special tax provisions with a smaller cost to taxpayers (or no estimated cost due to current circumstances). These include the enhanced oil recovery credit, the credit for oil and gas produced from marginal wells, the deduction for tertiary injectants, and the exception from the passive loss rules for working interests in oil and natural gas properties.

          [2]. Alan B. Krueger, Testimony before the Senate Committee on Finance Subcommittee on Energy, Natural Resources, and Infrastructure, September 10, 2009.

          [3]. All revenue estimates are, unless otherwise noted, from: General Explanations of the Administration’s Fiscal Year 2012 Revenue Proposals(Department of the Treasury, 2011).

          [4]. Chuck O’Toole, “‘Gang of 10’ Energy Compromise Would Strip Oil and Gas Deduction,” Tax Notes, August 4, 2008).

          [5]. Joint Committee on Taxation, Description of Revenue Provisions Contained in the President’s Fiscal Year 2011 Budget Proposal (Government Printing Office, 2010), p. 318.

          [6]. Robert Pirog, “Oil and Natural Gas Industry Tax Issues in the FY2012 Budget Proposal” (Washington: Congressional Research Service, 2011).

          [7]. This is the industry estimate of the effect on oil companies of President Obama’s proposal to eliminate LIFO as a whole. See: American Petroleum Institute, “Significant Industry Tax Issues Contained in President Obama’s FY 2012 Budget” (2011), available at

          [8]. In 2005 the use of LIFO inflated the cost of goods for the five biggest oil companies by a combined $12 billion, thereby reducing their taxable income. See: David Reilly, “Big Oil’s Accounting Methods Fuel Criticism,” The Wall Street Journal, August 8, 2006.

        • Bob_Wallace

          Now, your big questions have been addressed.

          I’d like to point out that your are wildly off topic for this thread. If you’d like to discuss the wisdom of subsidizing energy might I ask that you take it to an appropriate thread?

  • exdent11

    What drives these ultra conservative forecast? If one wants to find the source cause of such flawed results , one has to look at political considerations which means the vested interest groups that supply the money.

    • Bob_Wallace

      The pro-oil administration left office in January 2009.

      This could be an office run by a left-over from that administration. At the least it’s an office producing work that I don’t think the previous or current Secretary of Energy would approve.

      No one running a very large organization can be aware of everything happening at all times. Our goal is to get this information on the desk of someone high in the department and make them aware of the inadequacy of the work coming out of this office.

      • exdent11

        If you succeed and manage to get the DOE to upgrade their computer models to something approaching reality, the effect would be enormous because it would remove the economic fig leaf used by the right to avoid switching to renewables. I applaud your efforts.

        • Bob_Wallace

          If we can’t get the EIA to clean up their act then the next step (perhaps one we should undertake now) is to make sure that people know about the problems with these predictions.

          BTW, these are not the only highly questionable predictions out of the EIA Crystal Ball department.

          They predict that the cost of wind and solar will be 2x as expensive in 2018 as they now are (as confirmed by EIA current price reports).

          They predict that only 1% of new car sales will be EVs and only 1% new car sales will be PHEVs in 2040. (I need to double check the year. Might have been 2030, but still ridiculous.)

  • Sid

    The authors of this letter confuse projection with forecasting. EIA isn’t forecasting. It is “projecting” current happenings into the future via modeling.

    However, the report doesn’t seem to project the continuation of rapidly falling prices in numerous renewable markets or alternatively it assumes market prices that are too high or decline rates that are too low.

    In light of the recent rapid uptake of these products and EIA’s poor earlier projections, it is hard to see why EIA hasn’t either adjusted its methodology or explained in detail why they do not need to make changes.

    • Bob_Wallace

      The first definition of “projecting” that popped up –

      “estimate or forecast (something) on the basis of present trends”

      If you don’t include the present downward cost trends then you should put a big red banner on your site that says –

      “These Projections Should Not Be Considered Useful for Any Purposes”.

    • RobS

      I wrote the majority of the letter and didn’t confuse the two at all. As you point out they clearly aren’t simply projecting current happenings, their report assumes some factors will remain the same like price, and other factors will change like subsidies so they are not simply projecting but forecasting a series of variables with a model. We believe the outcome of the model is embarrasingly absurd and has been for about the last decade with previous forecasts for 2035 made in 2010 having already been surpassed 16 times over in 2013.
      These reports don’t just disappear into a black hole they are vital in guiding future energy policy and their woeful record in anticipating trends in renewables needs to be highlighted otherwise it can be used to argue that they have no future which can then become a self fulfilling prophecy if support is dumped as a result.

  • Bob_Wallace

    The “subsidies go away” assumption –

    Subsidies for wind and solar are likely to go away. The subsidy for solar drops from 30% to 10% in a couple of years. I think the wind industry assumes not many more years of federal subsidy.

    But the death of subsidies won’t mean the death of wind and solar. Both of their prices are falling rapidly.

    The average cost of utility scale solar is around $2/watt. ($2.04/watt Q3, 2012 – GMT). A 30% PTC brings that down to $1.40. We’re installing a lot of solar at $1.40.

    Italy is installing for $1.30 without subsidies. We can install as cheaply as Italy, we just need to get more efficient. Panel costs are likely to fall 20 cents over the next few years which will help us drop costs to $1.40 and below. We’ve got robotic installers coming which will greatly cut installation labor costs.

    Abruptly ceasing subsidies would be disruptive. But only temporarily. Installations would continue, only at a slower pace. Not flat line.

    Finally, wind and solar are now large enough to have some political clout. Especially wind. Republican governors of conservative states have been lobbying the federal government for wind support. Subsidies are very unlikely to be jerked away in a manner that would significantly crash two of our fastest growing industries.

    • “But the death of subsidies won’t mean the death of wind and solar.”

      That is the core of the issue.

      Instead of taking a bipartisan position, the EIA models are totally based on the ultra rightwing dogma that renewables are a liberal hobby entirely held up by subsidies. I think that from a democratic viewpoint that is deeply troubling, since it suggests the EIA is run by the oil barons.

      • Bob_Wallace

        The EIA is part of the Department of Energy which is under the control of the President of the United States. It’s funded by taxpayers. It’s not run by the oil barons.

        Is this office of the EIA staffed with people who are anti-renewables and pro fossil fuel/nuclear? That is quite possible. The previous administration which was quite pro-oil (remember the invasion of Iraq?) made a point of embedding people deep into the government in order to extend their influence after they left office. (Perhaps all administrations do.)

        I see the possibility that there’s a “left-over” running this office. I also see the possibility that there is someone running office who is simply putting in their time and doesn’t give a damn about the quality of work they produce.

        Our goal, I believe, is to get someone at a higher level to take a look at the prediction office and see if they need to fix a problem in their agency.

  • Adam Grant

    There’ll be a political “state change” as solar and wind deployments rise through 8 – 16% of electrical capacity in any given market.
    When a technology is just getting established, it’s possible for the big players to shout loud enough that the little guys aren’t heard, however valid their message is. That becomes impossible once the deployment S-curve enters its “rapid rise” phase.

    Just as the fall of the Berlin Wall was impossible until it happened and historically inevitable afterward, the political system will back fossil extraction until the lies become untenable, then suddenly one day between 2015 and 2020 policy arguments will need to backed up with hard data and political support for the fossil industry will evaporate within a single election cycle.

    Basically, the renewable meteor has landed and it’s just a matter of time before the fossil fuel extraction dinosaurs become fossils.

    • Ross

      Yes. While the next GOP presidential candidate might still be a caveman it’s hard to see the one after that still be beating the fossil fuel drum. He’ll probably be on big wind and solar’s payroll.

    • exdent11

      I very much hope you are right.

    • JimBouton

      In ERCOT, we are already into that 8% to 16% range with renewables. In 2013, renewables (mostly wind) were at 10.5%. This year will be interesting, since three large transmission lines were finally established out from west Texas and south Texas. That seemed to be a big bottleneck in using the wind resources. (I’m hoping this is the year we overtake nuclear, which is at a 12% share.)

      Sadly, the wind’s share drops significantly in the summer (around 4%.) Part of that can be solved with the new transmission lines, but that is where solar could make a tremendous dent into the usage statistics.

      As expected, Texas Republicans are still anti-renewables. The good news is that the business leaders are not.

  • Senlac

    They are predicting themselves into obsolescence. Their forecasts being surpassed 16 times in 3 years, pretty much means they are on another planet. The real question is; where is this planet? Kepler has yet to find an Earth like one, although there are a few runner ups.

    Thank you Zachary.

    • RobS

      I think they would be better to not make a renewable forecast and simply put a disclaimer in the report saying “The EIA is at present and has for some time been incapable of making an accurate forecast of renewable energy adoption, we hope to be able to bring you such a forecast again in the future once we have produced new models relevant to the modern evolution of renewable generation technology”

  • Dimitar Mirchev

    That’s uber cool!

    IEA is pretty much the same!

  • jburt56

    It’s a political document predicting that clean energy gets clobbered in 2016.

    • RobS

      I don’t think solar, wind, biomass and LFG installations would all flatline for 15 years even if all federal subsidies were terminated. I certainly don’t think the EIA should be in the business of forecasting election outcomes, nor even if there is a republican clean sweep do I think all subsidies would come to an end. Even as a politically charged document I think the forecasts are absurd.

      • jburt56

        Hopefully working together we can ensure that these forecasts are wrong. I don’t think we can afford another stagnation.

      • I don’t see any way they’d flatline either. Beyond the “no policy support” assumption, there are cost assumptions in there that are just absurd.

        • Exactly, the couple dozen states with 10-30% renewable energy mandates are not going to disappear over night.

          • Russell

            Yes, how can they ignore those?

      • Bob_Wallace

        We have an aging nuclear and coal fleet. While some talk of extending our reactor life from 40 to 60 (or more) years, the fact is that from time to time these plants encounter very large repair bills that make them too expensive to keep on line.

        Some may make it to 60 years or longer but, just like humans, others will fall to the wayside and need replacing.

        New coal and new nuclear would produce electricity at >15 cents/kWh based on the information we have.

        New wind is producing electricity for around 5 cents/kWh with no subsidies. New solar is producing electricity for under 10 cents/kWh with no subsidies. New geothermal is under 10 cents/kWh.

        As rooftop installation costs drop end-user solar will compete well with retail electricity prices without subsidies and retail customers will continue to install solar. (And end-user is now counted in the EIA figures.)

        Even if renewables receive no subsidies past 2017 and coal/nuclear continue to be subsidized simple math tells us that utilities are going to use wind/solar/geothermal as much as possible to replace broken down coal and nuclear plants.

        Wind and solar will be purchased by utilities as a hedge against rising NG prices.

        • Peter Moss

          I see that you are peddling the same snake oil here by underestimating the price of coal (10.01¢/kWh) and advanced nulcear (10.84¢/kWh) and underestimating wind (on shore 8.66¢/kWh), and solar PV (wholesale 14.43¢/kWh). Oddly, you over estimated geothermal (8.96¢/kWh) And, of course you appear to have again ignored the existance of natural gas. Gas Turbine Combined Cycle (advanced 6.56¢/kWh) is the cheapest by a considerable margin.

          EIA figures for new plants:

          • A Real Libertarian

            Here’s a hint.

            In an article about how the EIA’s forecasts are shitastic.

            Don’t cite more of their forecasts and expect everyone to agree with you.

          • Bob_Wallace

            Do you not realize that the 2018 EIA price predictions are as flawed as their capacity predictions?

            Just one example –

            The EIA predicts that onshore wind will cost 8.66 cents in 2018.

            The NREL (also part of the DOE) reports that the average price of onshore wind sales (PPAs) in 2011 and 2012 was 4 cents per kWh. That price is lowered about 1.5 cents by subsidies, so call it < 6 cents.

            We're already below the 2018 cost prediction with prices continuing to fall.

          • Peter Moss

            You missed the point of the EIA figures if you think that they are predictions. They are not. They are figures for costs of plants coming on line in 2018 in todays Dollars. That means that they are for plants being built currently.

            You make the assumption the price of some current onshore wind sales represents the cost of production. You have failed to consider that fact that these wind farms might be tax shelters and you appear to be making no allowance at all for the 30% investment tax credit which is also a subsidy. Also, is the price you quote FOB or does it include transmission line costs as the EIA figure does?

            What reason is there for the costs of wind production to continue to fall. It appears to have already become a mature technology. Do you see any developments in the future that you anticipate will reduce the price of the hardware significantly? Actually, the prices have been depressed somewhat due to Chinese dumping the same as the solar market has.

          • A Real Libertarian

            “You missed the point of the EIA figures if you think that they are predictions. They are not. They are figures for costs of plants coming on line in 2018 in todays Dollars. That means that they are for plants being built currently.”

            No, it takes 2 years at most to get wind farms built, solar is quicker.

          • Bob_Wallace

            Peter, overnight cost for plants is stated in cents per kW. That’s how the electricity produced is priced.

            The PTC for wind and solar is 2.3 cents per kWh for the first 10 years of production so adjust the 4 cent selling price of wind over 2011 and 2012 upwards by 1.15 cents to 5.15 cents. Then realize that wind farm owner profits are included in that 5.15 cents.

            5.15 is considerably less than 8.66 cents.

          • Peter Moss

            So, there does still appear to be issues about your low price:

            1. Said price plus the subsidy might not actually be equal to the actual LCOE of the electricity produced.

            2. The EIA price might include some additional transmission costs.

            I really think that you need more than just one price to say that EIA’s research isn’t accurate.

            I am also puzzled as to why these wind farms that you refer to appear to be selling their power for less than it is worth.

            China does dump turbines in the US:



            Now, they have been hit with punitive duties and this may have greatly slowed down or stopped, but it was happening.

          • Bob_Wallace

            The selling price of wind includes all the LCOE costs (capex, finex, and opex) along with other costs such as transmission and owner profits.

            It is lowered about 1.15 cent’s per kWh on a 20 year PPA by subsidies.
            Wind farms are selling electricity for an average price of 4 cents per kWh and making a profit. That is why people are investing in wind farms.

            Your links are for towers, not turbines.

          • Peter Moss

            The selling price of wind includes all the LCOE costs (capex, finex, and opex) along with other costs such as transmission and owner profits.

            You can say that, but it doesn’t make it true.

            As I said, they might be investing in them as tax shelter LPs. Those don’t have to make a profit. People invest in such ventures for other reasons.

            And, the utilities might be paying some extra transmission costs.

            Yes, those are for towers. But, at a large part of a Million each, they are not a small thing. I find it hard to find citations for turbine imports. Just a snippet here and there.

            I think that duties applied to wind turbines in general, not just parts.

            I understand that Vestas was importing turbines from their own plants in China but this has probably been reduced now that they have built more US facilities.

            I also understand that Goldwind, a Chinese company, has been installing large wind turbines in the US. However, they have been using US components to go with their imported generator nacelle units.

            There is also the question of the import of parts other than towers. But, these appear to come from places other than China.

            It appears that there is a global over capacity for the production of wind turbines and parts. Just like with solar PV, this does not require dumping to depress prices.

    • Bob_Wallace

      I suspect it’s the output of a crude model.

      The model is fed information that subsidies won’t continue after 20xx. But it’s not fed information that wind and solar prices are rapidly falling.

      The EIA totally blew their forecasts for solar growth a few years back by not considering the rapid rate at which panel prices were falling. It was clear to anyone watching panel prices that installation rates were going to accelerate, were already accelerating, but the EIA drew a flat line based on past history.

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