IEA Gets Hilariously Slammed For Obsessively Inaccurate Renewable Energy Forecasts

One of our readers recently shared this beauty of a post on Quora. Author Paul Mainwood starts out his short post like this:

I was trawling through the International Energy Agency reports (the way you do) and was struck by two features.

1. The close similarity of their projections to those put out by the fossil fuel industry (e.g., Shell’s Outlook)
2. The extraordinary consistency with which they under-forecast the role that renewables will play in energy mix

Like the US Energy Information Administration, the IEA uses various methodologies and assumptions that just consistently bias their forecasts against renewables. It’s easy to assume there are some nefarious ulterior motives underneath these consistent errors — crony capitalism and controlling hand of the pollution industry kind of stuff. That’s certainly possible, but I haven’t seen strong evidence of it and won’t jump to conclusions.

Another simple explanation could be that these large energy agencies, over the course of decades, have refined their systems for analyzing and forecasting conventional energy industries that have changed rather slowly over time, but those analytical systems are now inadequately understanding what is happening with renewable energy. The methodology is just out of date.

Either way, though, the problem is that faulty reporting of wind and solar energy additions as well as obsessively pessimistic forecasts mislead the public, mislead investors, mislead businesses, and mislead policymakers.

Mainwood’s brilliant solution? The first part was to put decades of forecasts together on one graph as well as a line for actual share of electricity generation (from non-hydro renewables). Here’s that graph:

In case you missed the key points, here’s a bit more “matter of fact” humor from Mainwood:

“Note that the IEA have never, ever been guilty of over-forecasting renewables. Or even of overstepping some future projection by a little and having to reel it back later (the grey 2004 line does pop above the actuals for a couple of years, but the IEA can heave a sigh of relief, this is my interpolation line, not their forecast). All the IEA have ever done is increase their forecasts every year, and even then, they have still ended up with an underforecast versus the actuals — every year.

“This is particularly noticeable when you have nice round dates like 2020 or 2030 for which we have a lot of forecasts. You can watch them slowly add more and more to the forecast, apparently oblivious to the fact that this happens every year. …

“Wouldn’t you think that one of these fossil industry IEA guys might take a step back and wonder: hang on a second — might we be systematically under-forecasting? Apparently not.”

Mainwood went even a step forward. He decided to analyze the degree to which the IEA seems to systematically underforecast renewables. His core finding was that the agency corrects previous forecasts by about 9% each year. Here’s a statement on that: “This astonishing consistency in under-calling allows us to construct a rule-of-thumb correction to the IEA’s figures. If we assume that they will be as inaccurate in the future as they have been in the past (a big assumption, true) then we can ‘correct’ their projections for the next few years.”

Hard to see which line stands out from the rest, eh?

Looking at the IEA forecasts without the corrected projection, the growth can look positive at first glance … but also depressingly slow. Looking at the corrected projection, we get an adoption trend that is much more in line with the disruptive S-curve many people closely following clean energy have been expecting.

Here are Mainwood’s concluding remarks on the topic:

“This undercalling is familiar in legacy, dying industries: Kodak had similar curves drawn every year, marked ‘digital camera market share’. And every year, they looked at each other and moved the curve up a bit. Every year. Until film died.

“Naturally, the IEA will ignore this sort of reasoning and their own track record, and will continue slowly moving their curves upwards based on linear trends; for they are reliant on oil industry analysts. And, following Upton Sinclair, we can note that it is hard to get someone to understand something when their salary depends on them not understanding it.”

Will the International Energy Agency correct course … not just once a year after the fact but before publishing incorrect forecasts? My hunch is this won’t happen anytime soon. I’ve seen the head of the IEA participate on several panel discussions, and his comments are (unfortunately) more in line with crazy comments made by oil people like the head of Saudi Aramco (exclusive) than the much more accurate renewable energy forecasters at Greenpeace.

Whether for a selfish purpose or out of honest error, the IEA is consistently putting misleading air into a huge carbon bubble and would need to change something deeper than its statistical methodology in order to forecast the future in a more realistic light.

Since that’s the case, next time the IEA comes out with its “authoritative” World Energy Outlook, be sure to direct your friends and family (and fun internet trolls) to this article or Paul Mainwood’s original post on Quora in order to help clear up potential confusion.

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