If you were to form your opinions on renewable energy from Energy Information Agency (EIA) reports and datasets, you might be under the illusion that we are reaching a peak in distributed solar and wind development, among other non-hydro renewables. For those less familiar, EIA provides a robust dataset of energy consumption and costs going back to 1960 in many cases, which they supplement with forward-looking projections to 2040 in their Annual Energy Outlook. Though they are considered a non-partisan research branch of the U.S. government, their data seems to represent a particularly pessimistic, and at times downright false, perspective on what is happening with renewable energy development.
EIA bearish on renewables, despite reality on the ground
Digging into the numbers, the EIA forecasts a bleak period of next to no growth in non-hydro renewables until nearly 2030. In fact, projections to 2040 have renewables at only 16% of the U.S. energy portfolio (currently at 12%), while natural gas continues to grow and even coal only decreases marginally. So, for the next 24 years, the EIA would have us believe that we should get prepared for...very incremental shifts from the present day status quo. Not nearly the renewable energy transition that we would hope for. Now, on the one hand, the U.S. electricity generation stock is absolutely massive, and the inertial pull of path dependency and legacy infrastructure investments will anchor the electric grid for decades to come. This general sentiment likely colors the views of the EIA. But the plain fact of the matter is that this supposition is being undermined left and right by the remarkable growth in distributed generation development, growth that has been consistently, bordering on intentionally, dismissed in the EIA’s future projections.
EIA bullish on coal, again despite reality on the ground
Why does the EIA remain bullish on coal, an industry that is undergoing a massive contraction with few new plants scheduled to come on line and many more being taken off? On the other side of the coin, why does the EIA remain so tepid about acknowledging the clear shift in the energy market towards cheap, clean distributed energy? The answer is anyone’s speculation, and there has been a long-running and healthy debate captured nicely here. Many concerns revolve around the lagged cost and price information that the EIA promulgates, which perhaps indicates the workings of a slow government bureaucracy. But is that really an excuse, when there are abundant publicly available datasets that detail distributed energy development and economics from the ground up? More important than diagnosing this systemic bias is the fact that EIA projections are used to inform U.S. government policy. Many are working to combat the anchoring effect of EIA (see here and here), and there is growing awareness that the EIA does not have the final word on what is happening in the dynamic energy industry.
Forecasting the future of energy may be a fool’s errand, but let’s hold EIA to a higher standard
Energy forecasts are as plentiful as they are wrong. It is not surprising that the EIA, like many other agencies and research groups gazing into our energy future, has not hit the mark on their forecasts. What is more worrying is that even their data on our current energy system is misrepresentative of the reality on the ground. At risk of being a bit blasphemous, let’s suppose that scientists are not always objective, which if you assume is the case with the EIA, then you have to start wondering what is the agenda behind presenting such a skewed picture in their datasets and reports. Perhaps it is benign neglect of the changing energy landscape beneath their feet, or maybe it is that the movement towards distributed renewables poses more of a threat to the status quo than many believe. Fortunately, there is some evidence that the EIA may finally be ready to come clean (pun intended) on their energy forecasts, but until they do let us continue to cast a skeptical eye on what the EIA has to say about the transition to renewable energy.
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