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EIA Understates Reach, Overstates Cost of Wind and Solar

In its latest Annual Energy Outlook, the U.S. Energy Information Administration carries on a tradition of underestimating the potential and overestimating the cost of wind and solar development, leading policy-makers and investors to place higher priority on conventional energy sources like natural gas.

In its 2015 report, released last week, “the EIA predicted that the United States would only increase its use of renewable energy consumption from 8% to 10% by 2040. Coal will continue to account for 18-19% of U.S. energy consumption over the next 25 years, while natural gas’s slice of the pie will grow 2%,” ClimateProgress reports. “Other analysts, including Bloomberg New Energy Finance, expect the U.S. coal fleet to continue to diminish.”

The problem is that “lowballing renewables can have major impacts on our energy future,” Page writes.

“Real policies are being designed around these assumptions,” said Union of Concerned Scientists analyst Jeff Deyette. The EIA’s projection problem begins with inertia, he added, but also reflects the difficulty of adjusting multi-year models to reflect the rapid cost reductions that have swept the renewable energy industries.

“It’s not just that they are wrong—any projection is going to be wrong,” added American Wind Energy Association analyst Michael Goggin. “It’s that there is consistent bias” in favour of natural gas.

“The discrepancies in predictions can be striking,” Page notes. “The report this year predicts that by 2040, the U. S. will have added only 48 gigawatts of solar generating capacity. The Solar Energy Industries Association (SEIA) expects that the industry will add half of that by the end of 2016.”