Op-Ed: New projections play up coal while downplaying renewables — that’s not reality

Source: By Daniel Cohan, The Hill • Posted: Monday, February 12, 2018

Wind and solar are headed for sharp slowdowns, and coal for a reprieve, if projections from the latest Annual Energy Outlook come to pass. But there’s strong reason to expect that reality will continue to defy the government’s projections.

Released by the Energy Information Administration (EIA) on Tuesday, the Annual Energy Outlook projects all aspects of U.S. energy through the year 2050. Previous domestic and international outlooks have been plagued by poor assumptions that cause them to severely underestimate renewables and overestimate coal. My initial look at the latest release suggests that those errors persist.

EIA continues to ignore solar cost data reported by fellow branches of the Department of Energy. The outlook assumes new solar farms will cost nearly double what they actually cost last year, as reported by the National Renewable Energy Laboratory. EIA also tends to underestimate how quickly solar costs decline as technologies improve. Together, this leads EIA to project sharp slowdowns in solar installations as tax credits are phased down, and a muted rebound in the following decades.

For land-based wind, the outlook is more ominous. EIA expects wind installations to virtually cease after the federal production tax credit phases out. That would spell the end of an industry that employs over 100,000 workers, nearly double the number of coal miners. By contrast, Energy Innovation forecasts that wind power will continue to grow for decades to come. That’s more consistent with cost estimates from Lazard, which finds wind power to be the least cost option for new power generation, even without subsidies.

Offshore wind is virtually nonexistent in EIA’s outlook. That will come as a surprise to Maryland, Massachusetts and Connecticut, which have each already announced contracts or solicitations for hundreds of megawatts of wind turbines off the Atlantic coast. Meanwhile, New Jersey and New York have each committed to thousands of megawatts more over the next decade.

Yet, EIA expects the entire United States to have just 60 MW of offshore wind capacity by 2050. In other words, EIA doesn’t expect these states to achieve even 1 percent of their near-term goals, let alone build more in the decades that follow.

Alongside its gloomy projections for solar and wind, EIA may be giving false hopes to the coal industry. As Taylor Kuykendall reports, most coal power plants are already over 40 years old. EIA appears to assume that aging plants will stay open through 2050 so long as they haven’t already announced retirement dates today.

Even with President Trump proclaiming to have ended the “war” on “beautiful, clean coal,” closures have actually accelerated. This year in Texas alone, four coal plants are closing that did not announce their retirements until last year. It’s simply implausible to assume that such closures will suddenly stop.

So what happens if EIA is wrong — if solar costs don’t mysteriously double, the wind industry doesn’t implode, and septuagenarian coal plants don’t discover a fountain of youth? EIA offers “side cases” to explore alternate futures. But these cases focus almost exclusively on oil and gas, with different assumptions about their cost, abundance and economic growth. That tells us nothing about what would happen under realistic solar prices, additional coal plant closures, or meaningful changes in policy. Also missing is any look at a future with more electric cars than baseline projections.

Furthermore, projection errors are likely to compound themselves. For example, cheaper than expected solar costs may cause more coal plants to close, and more coal closures will open opportunities for solar and wind paired with storage.

The solar and wind industries have reason to hope that their futures will be less bleak than EIA’s outlook would suggest. But as I’ve argued before, these perennially flawed outlooks have a self-fulfilling way of slowing renewables and perpetuating fossil fuels by skewing investment and policy decisions.

Once again, we’re left with a cloudy crystal ball, with no good way to defog it. Its portrayal of the future is not merely fuzzy but skewed toward coal over renewables.

We can’t expect a perfect forecast. But we can call on EIA to fix systemic biases and errors in its assumptions, and to provide side cases that better portray uncertainties beyond oil and gas.

Daniel Cohan is associate professor of civil and environmental engineering at Rice University.