The U.S. Department of Energy’s EIA projections continue to miss the mark

Much ink has been spilled over the vast difference between the scenarios put forward by the U.S. Department of Energy’s Energy Information Administration (EIA) and reality. And whatever the arcane arguments made by EIA, the fact remains that even without the impact of new policies, the agency’s scenarios remain utterly incongruent to current reality.

Unlike the agency’s Annual Energy Outlook (AEO), International Energy Outlook focuses on global trends. But like AEO, the report misses the boat on renewable energy and makes projections about the fossil fuel industry which run counter to facts on the ground.

International Energy Outlook 2016’s section on electricity forecasts that total generation from renewable energy sources will rise 2.9% annually under the baseline scenario to reach 29% in 2040, driven by non-hydro renewable energy rising 5.7% annually. By contrast, EIA expects global coal use to rise 0.8% annually, and for coal to still represent 29% of global electricity generation in 2040, the same amount as renewable energy.

EIA has been careful to note that its baseline scenario is based on no new policies being implemented, including those that are currently under development. However, the problems with the agency’s scenarios go deeper than this, as they do not reflect existing market conditions.

An initial problem with International Energy Outlook is that much of the data it cites is from 2012 and 2013, and that in the three-plus years since that time there have been substantial changes to the global energy picture. As of 2016 the global coal industry has entered a free-fall, with collapsed coal prices, Chinese use plateauing, U.S. coal-fired generation shutting down, and even India closing coal plants.

“The EIA forecast that global coal use will increase is literally completely off what everyone else in the world is saying,” solar industry pioneer Jigar Shah told pv magazine. Shah has been vocal in his criticism of projections by both EIA and the International Energy Agency (IEA).

?Beyond this, EIA’s numbers do not appear to match other estimates even for the year 2012. In the report EIA states that electricity generation from solar PV is rising 8.3% annually, and does not state under what time frame.

Installed global PV capacity grew around 40% annually from 2001-2011. And as PV modules and installations are getting nominally more productive, not less, this means that electricity generation from PV grew at least as much, if not more.

Since that time the rate of growth of global solar installations has slowed, however the global rate of capacity growth was still 25-30% from 2012 to 2015. So in order for EIA’s number of 8.3% work for the period to 2040, the rate of global deployment must fall sharply.

Tellingly, the report features a sidebar on PV production, noting that the rate of manufacturing capacity increases fell from 2011 to 2013, during a time when the solar industry was in a deep crisis due to overproduction. There is no mention of the dramatic fall in cost of electricity contracts from solar PV, which have reached under US$40 per megawatt-hour in some regions.

“We will achieve double what EIA says that we will be achieving in their most bullish case,” predicts Shah. He also says that the greatest danger with EIA scenarios is the role that they have in impacting policy decisions.

“EIA knows that its projections are used around the world for planning purposes, but then separately said that this is a baseline upon which forecasts are built,” states Shah. “I know that there are governments around the world that are using this forecast, so I do blame them.”

“The only way to describe it is that it is criminal.”