Biomass Regional onshore oil infrastructure variations (EIA 2015)

Published on April 20th, 2015 | by Sandy Dechert


EIA 2040 Forecast Understates Renewables, Policy, Contingencies

April 20th, 2015 by  

Report coverLast week the U.S. Energy Information Administration released its Annual Energy OutlookEIA’s big news: American energy imports and exports will come into balance for the first time in over 50 years. Says EIA Administrator Adam Sieminski:

“EIA’s AEO2015 shows that the advanced technologies are reshaping the U.S. energy economy. With continued growth in oil and natural gas production, growth in the use of renewables, and the application of demand-side efficiencies, the projections show the potential to eliminate net U.S. energy imports in the 2020 to 2030 timeframe.”

Okay, that’s an attention-getter. But before we all start jumping up and down about being a net exporter again, we need to take a closer look at how EIA says we’ll be getting there. In doing so, we find some answers based on “same old, same old” with a wave of the wand of oil and natural gas, a lick of slower growth in energy demand, likely underestimation of the potential of renewables, an uneven eye to policy influences, and little allowance for the role of likely events.

Here’s the quick glance at the report’s findings that EIA supplied for press use.

Declining US net energy imports (EIA 2015)

Regional onshore oil infrastructure variations (EIA 2015)Wind and solar generation as a percentage of total electric load growth (EAI 2015)Four of EIA's six energy forecast scenarios (EIA 2015)

Let’s address the subject of renewable energy right away. The EIA report projects that all nonhydro renewables will account for only 18% of the country’s electricity generation by 2040, up from 13% in 2013.

For many, this figure disappoints. Taken in context, though, EIA’s previous annual forecasts through 2040 have drawn criticism for lowballing wind and solar power and understating the potential of renewables to cover more than a small fraction of the country’s electricity needs.

As analyst Jeff St. John points out in, inherent problems with the EIA’s numbers include the following:

  • EIA fails to keep up with industry data on the rapidly falling costs of renewable technologies.
  • EIA historically underestimates continuing performance improvements in terms of increasing capacity factors, or the amount of “nameplate” capacity of renewables.
  • EIA’s cost multipliers assume that future renewable power installations will cost more than those already built.
  • Data on solar power projects excludes those smaller than 1 megawatt in size (e.g., no data on the meteoric role of rooftop PV).

Says Jeff Deyette, senior energy analyst with the Union of Concerned Scientists:

“Under the Clean Air Act, EPA has to come up with the best system for emissions reductions for power plants. They have cost-achievable thresholds they have to abide by when setting target reductions for states. When they’re using EIA’s assumptions, they’re underestimating the cost-effective reduction potential of renewable energy–and you have targets for the states that are lower than they could be.”

To these objections I would add the rapid evolution of grid structures, not addressed in the EIA analysis and unevenness regarding the role of policy. The result: underperformance of the energy system as a whole, based on “same old, same old” assumptions regarding the extent to which renewables can replace coal-fired and other costly and polluting types of power plants.

Presenting the key findings last December of International Energy Agency’s World Energy Outlook 2014, Dr. Fatih Birol, Chief Economist and Director of Global Energy Economics at the International Energy Agency, offers a related conundrum: “Will change in global energy be led by policies,” he asked, “or driven by events?

In the case of the US, several key policy matters stand out: the role of nuclear power, the future of oil and gas subsidies, and the effects of the Obama administration’s Clean Power Plan. Although nuclear power could enhance energy security and decarbonization, it faces political uncertainty regarding safety, financing concerns, and public opposition. Likewise, subsidies for oil and gas–globally, four times higher than those for renewables, and not insignificant in the US–are yet unresolved.

Finally, and most importantly, EIA does not include in its Annual Energy Outlook an existing policy crucial to balancing conventional fuels and renewable energy: the impacts of the clean power plan set in motion by the present US administration. Although final rules are not yet in effect, large changes related to this outcome (most obviously, disinvestment in coal) have already begun in anticipation.

“We will have a separate report out in May” that does address the influence of renewables, says an EIA official. Why separate the two? “Because it’s complicated” was EIA’s reply. Sounds a lot like Facebook. “We wanted to get the reference case out first.” Oops, weren’t we talking about six different cases comprising the current set of numbers: Reference, Low Economic Growth, High Economic Growth, Low Oil Price, High Oil Price, and High Oil and Gas Resource–definitions here? How many new scenarios can we expect?

By contrast, the International Energy Agency forecasting process–described in World Energy Outlook 2014 and the World Energy Outlook 2015, upcoming in November and widely recognized as the most authoritative strategic analysis of global energy markets–views discussion of all policy matters and signs of stress as essential to the realism of its projections.

As Dr. Birol points out, and this week’s International Monetary Fund spring meeting viewpoint echoes, geopolitical and market uncertainties clearly influence any energy equation. Among these are emergencies like the Fukushima debacle, the short-term and potentially longer-lasting volatility in the Middle East, the expected slowdown of Chinese energy demand growth in the coming decade, and the upcoming roles of India and east Asia as the highest energy demanders, all downplayed or ignored in the EIA report.

The role of internal politics cannot be understated either, as shown Australia’s recent series of policy reversals, rethinking generated by China’s urban air pollution crisis, and the potential for massive promise-breaking such as the default threatened by the newly emboldened Republican Congress of the United States. Nor can the decisive power of climate change (mentioned only briefly in the EIA report), which has mushroomed to the extent that the world’s entire climate budget to 2100 is now on track to be exceeded within the next quarter century.

So far more possibilities exist than those indicated by the narrow range of assumptions that EIA has included in this latest assessment. Respected voices are saying that America can, and should, get 100% of its energy from renewables by 2050, that 80% would be good enough, or 100% by 2100, or that 50% is attainable in the next 35 years, and so on. EIA’s limited focus can support none of these.

The organization claims in Figure 4 to cover “scenarios that encompass a wide range of future crude oil price paths.” Great to have such a diverse oil perspective, but the exploration of renewable and other scenarios seems puny by comparison.

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About the Author

covers environmental, health, renewable and conventional energy, and climate change news. She's currently on the climate beat for Important Media, having attended last year's COP20 in Lima Peru. Sandy has also worked for groundbreaking environmental consultants and a Fortune 100 health care firm. She writes for several weblogs and attributes her modest success to an "indelible habit of poking around to satisfy my own curiosity."

  • johnBas5

    Please add a remark about the EIA vs Greenpeace forecasts article and link to the article in the heading plz.

  • RobS

    Wan to know just how absurd the AEO predictions are? By the end of 2014 the US reached a level of solar installations that the AEO 2014 predicted wouldn’t be reached until 2030, less than one year to install what the EIA predicted would take 16. They were informed about the shocking insufficiencies in their renewable forecasts last year and dismissed the concerns, the concerns were shown to be fully justified, yet they persist with the same assumptions and only serve to make themselves look like fools.

    • MrL0g1c

      It’s as if they hate renewables and think that making up pathetically bad wrong predictions will somehow stop the tide of clean energy.

      Someone at EIA should be fired or demoted 3 levels.

      • RobS

        The word on the street is that they know how backwards the models are but there are a lot of conservative politicians and bureaucrats that make their lives hell if they change the models even slightly to “favor” renewables.

        • JamesWimberley

          The Cossacks work for the Czar. Sieminski is accountable to Secretary Moniz and President Obama, not anybody in Congress.

          If Moniz has a bias, it’s pro-nuclear: this leads to over-generous research funding for long shots like small modular reactors, but is pretty harmless, as Wall Street is dead set against big nuclear projects today. His expertise came in handy during the negotiations with Iran. Obama keeps up the “all of the above” rhetoric, but even this is shifting against coal and oil. He is letting the gas bubble implode without comment or assistance.

          • RobS

            I realize the formal chain of command, however my understanding is that congressional oversight committees still hold a lot of sway, I’m just reporting a runout that I have heard that there is great pressure against any change to the models which would modernise then and therefore improve their treatment of renewables.

          • Matt

            They control the purse, budget, Money. So yea, congress has control.

      • Matt

        They predictions are used by FF exec and their reps to justify government policy that favors FF. Was set up after first oil price spike in 70s, with people from the FF industry. Who do you think they work for? The best approach is likely to close them and start again.

  • eveee

    EIA renewable forecasts have no credibility. Their track record is poor. Even the graphs they show are questionable. They have discontinuities starting at present time. For example, coals trend is down, but EIA shows Coal static for the next 35 years. It just does not make sense. Greenpeace predictions are more accurate.

    • MrL0g1c

      That’s what makes their predictions so stupid, they don’t even consider the trends of the last 10 years, they just make the bizarre assumption that most trends will halt and go flat or reverse and go upwards when they were trending down. They are a bit mad really.

      • eveee

        Yes. No matter how bad their last oredictions were, they never adjust. This despite a mail in letter campaign. It needs a full court press and national media attention. The way it is, it’s hard to feign ignorance. It looks intentional.

        • MrL0g1c

          It can be rather frustrating when some fossil fuel idiot or nuclear zealot comments about the EIA charts and claims large scale renewables are not feasible, if they were, EIA prediction would be different.

          I think the continuing wind and solar pv price falls will lead to a near-complete halt of further fossil fuel power stations worldwide, any predictions should contain that assumption and also work in the fact that EVs will likely replace ICE vehicles at an ever increasing rate – meaning more electricity is needed.

          • eveee

            Yes. I am quoting an NREL paper on the future of renewables 80% b y 2050. I am dealing with that right now. Not one, but two &%&%^&s. The second stepped into the fray to tell me I got it all wrong and didn’t read the paper. I couldn’t believe it. Then he claimed it was just electricity, didn’t include transportation. It does. It looks at EVs.
            You know, its not so much what I like or not, the whole issue is one of doing just a little bit of research to make sure there is some foundations and citing reliable, preferably peer reviewed sources.
            But then when you do, and wade through hundreds of pages of research and cite it, and then the response is conjecture, and the question is, did you read it?
            Wow. Just wow.
            And just as you said, someone will quote EIA or IEA as if their projections meant anything. Their projections are completely harmful and useless.

          • eveee

            Every month the report of new US generation shows no coal or nuclear. Its renewables and natural gas. And renewables are gradually outpacing even natural gas for new generation.
            A conversation with nuclear zealots is only marginally better than one with a climate denier. They are both deniers. Some are honest, but uninformed. Others… you want to take bath after dealing with.

            “At this point, denying that nuclear is a failed loser solution is about as realistic as denying that climate change is happening in the first place.”


            This a quote from a guy originally modestly open about nuclear, driven to the brink by an endless stream of moronic nuclear fanboy nonsense and incessant attacks on renewables.

  • Sorry, but this post is kind of gobbledygook. The only predictive figure clean technica folks should worry about from EIA is the one I attached below. EIA did a pretty safe analysis. There’s just too many variables for transportation fuels. Will EVs take off? Will they not? Will the US have to import LNG and the price of NG skyrockets? And again, this is just an outlook based on the status quo – with a little bit of nudging from renewables folks. Who knows, maybe nuclear will rear it’s ugly head and double by 2040. Or PV solar will quadruple in conversion efficiency and all electricity will be solar generated. Or World War III will start and they’ll be five people left on earth in 2040.

    The wild card is truly climate change and how badly things are impacted including water, food and energy use. We could be living in a very different world by 2040.

    • Shiggity

      What we’re saying is that they should at least project exponential situations. They refuse to even project them as *potential* scenarios.

      Do you really think things are going to basically stay exactly the same for the next 30 years? That’s silly talk.

      I worry about people who are pile driving all of their finances into oil and gas. It’s not the same energy landscape…

      • Will E

        take a walk in the future, Windpower, Solar Power EV cars only,
        storage, communities making money on clean energy providing schools healthcare sports with clean energy profits from Solar and Wind. and so on, the past is not relevant for future devolepment.

        • Yes. EIA is improving in its data collection for renewables. The group who does forecasting probably just need to add some renewable folks on the team. Plus EIA is stuck in the middle here. It has to error on the side of status quo. My interest in EIA is its past data. We need that as a free governmental service. Sadly, much of the good data on wind and solar sits behind a paywall run by AWEA and SEIA. They need to have a sitdown with EIA and share.

          When reading a forecasting report, always go to the author section. EIA has listed who helped out. All those who prepared the report are listed on page 2 of the report. If a renewable guy you know should be on the list isn’t’ on the list, then renewables groups aren’t doing their jobs. The squeaky wheel gets the grease.

          • johnBas5

            The EIA is steered by the fossil fuel industry.
            The fossil fuel industry is downplaying renewables almost to the point of outright lying by design.

          • With that attitude renewables will never make it. Nobody likes a complainer. Operating data presented in EIA for wind and large PV is exactly what’s being reported by wind and solar industry groups. EIA is under the DoE so it has to play nice. DoE is also helping renewables a lot with deployment so I wouldn’t pout. Moniz, the secretary of DoE is a renewables guy, btw. There’s a lot of constituencies to deal with and fossil fuel has been around a long time. Wind and solar better get themselves a seat at the table and stop whining.

    • Offgridman

      Even with the graph’s that you point out there is one big assumption that current trends could negate. This is their thinking that electric production is going to increase (irregardless of source) by another 25% over the forecast period. So with their ignoring PV under 1Mw they are also not taking into account all of the current efficiency improvements happening, stabilization and possibly even decreasing population growth. While ignoring also the forecasts from the banking and business world’s for the utilities to get used to the idea of reduced demand for Kwh.
      Now with widespread adoption of EV’s there could be an increase in the need for electricity, but how many of those people will also be installing solar to get their fuel (electric) purchases closer to zero, or getting charged at supercharger type networks which are promising to provide that power from green sources?
      Another thing they seem to not be aware of is how much of the manufacturing industry is going towards producing their own power with combined cycle natural gas plants in a distributed generation model. This not only allows them to use the heat for manufacturing, but causes an end reduction in the number of Kwh needed, grid usage, and line losses.
      There are just way to many ongoing trends that the EIA is ignoring for these forecasts to have any validity, with the concurrent problem that future plans and policies are based on these forecasts.
      We are going to end up in the same boat as Australia with way to much production and unnecessary grid and the costs for it. When the grid needs to be made smarter to encorporate what is actually happening.

      • The problem with offgrid, man, is that that small systems PV data may not get collected and available for EIA to both tally and use for projections. Even though forecasting is an educated guess at best, it can’t be done without actual education. So if small installations encompass a bigger generation number than reported to EIA – it won’t be a good starting point number. So EIA may stick to the status quo and the available data sets. I’m not supporting its forecast numbers. Just trying to justify why they seem so weak on renewables deployment. It’s not a conspiracy. Maybe it was ten years ago. Not now.

        Sometimes when doing data evaluation to build something or invest in something, the assumptions and caveats behind the numbers are more important than the numbers themselves. It may be a good blog post for clean technica to analyze the assumptions EIA made to get its forecast. If the assumptions are stupid, EIA should be told so. I’ll volunteer to rent an EV and drive to Washington DC and tell them for clean technica.

        • Offgridman

          Maybe it doesn’t seem so to the EIA, but for us looking on from the outside it seems as if this additional data is easily available.
          Zach has done many pieces covering not just installation numbers of the systems under 1Mw, but the production they are achieving on monthly, quarterly, or annual basis. Which is all being fed into the grid, not isolated offgrid systems.
          Didn’t mean to insinuate that there was any sort of a conspiracy to not include these. But it does seem obvious that if this type of data and trends are not included in formulating the forecasts then there is no way that they can be accurate or lead to the right decisions about dealing with what the future is bringing.

  • Deep Time

    As many others have said, the price of oil has relatively little effect on power production. Oil comprises a very small percent of overall generation. Coal and NG prices have a far greater impact.

    Also, does EIA consider carbon trading systems like the RGGI and those on the West Coast, and their impact on alternative energy sources?

    • Will E

      I want to ask,
      one question
      do they read cleantechnica?
      dont think so

  • Marion Meads

    As always. They should fire all of them and replace with GreenPeace! Then the predictions would be way more accurate.

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