Stung by persistent critics who have pointed out that its forecasts for renewable power generation have for years turned out to be way too low, the U.S. Energy Information Administration dramatically adjusted its expectations for renewable power in the latest edition of its Annual Energy Outlook, or AEO. Perhaps unsurprisingly, the federal agency failed to satisfy all of its detractors.
One significant change was to the projections of utility-scale solar photovoltaic generation by the power sector. The 2017 AEO had two projections for the year 2050, one with the Clean Power Plan, or CPP, to cut utility carbon emissions established by the Obama Administration, one without it. The baseline "reference case" in the AEO 2018 scraps the CPP altogether, assuming that the Trump administration will follow through on its plan to kill the plan.
AEO 2018 dramatically raises those projections: 172.35 GW of utility-scale solar capacity by 2050, with total generation of 409 billion kWh. That's a 63% increase for capacity and 93% for generation from the no-CPP case in 2017.
For cumulative generation over many years the differences are even starker. Energy analyst Alex Gilbert, co-founder of the SparkLibrary research platform, points out that for total utility-scale solar generation from 2030-2050 without the CPP, AEO 2017 projected 3,015 terawatt-hours. AEO 2018 has 6,220 TWh, more than doubling the year-ago number. Even compared to the CPP scenario in AEO 2017, the figure in AEO 2018 is 42% higher.
Solar capacity installed at residential, commercial and industrial sites also sees an increase in the new results, climbing 14% to 251 GW by 2050 in the 2018 AEO from the no-CPP case in 2017.
Changes to the model
"Overall, their renewable projections continue to improve," said Gilbert, who has been an outspoken critic of the EIA's analysis, in an email. "By 2050, they now project that aggregate renewables will be the third largest electricity producer, after natural gas and coal."
Christopher Namovicz, EIA’s team leader for renewable electricity analysis, outlined several changes to the agency's model that resulted in changes to the projections: the addition of solar resources at the high and low ends of the cost curve, the inclusion of more energy storage capacity on the grid, adjustments to projected coal and nuclear retirements, and more finely grained examinations of available solar and wind energy over the course of the day.
"In total, we have about 10% more renewable generation by 2050 (1,651 billion kWh in the AEO 2018 reference case compared to 1,492 billion kWh in the AEO 2017 No-CPP case)." Namovicz pointed out in an email.
What AEO 2018 does not do is increase the projections for wind power capacity and generation. In 2017 the AEO projected 165 GW of total utility-scale wind capacity by 2050 under the no-CPP case; this year's edition lowers that figure to 139 GW, a 10% drop. Versus the CPP scenario, the drop is 25%. Non-utility-scale wind capacity remains minor in all scenarios.
"Wind, while still growing, appears not to compete as well against the combination of lower-cost solar and lower-cost natural gas that we are seeing in this AEO as compared to last year's AEO," explained Namovicz.
Essentially, the outlook foresees that virtually no new wind capacity will be added for a decade after the expiration of the federal tax credits in 2019. Given that wind power has expanded nearly as dramatically as solar in recent years, that seems to Gilbert and other independent analysts an odd finding.
"This modeled capacity installation crash has been a continuing issue with EIA's wind modeling efforts and likely reflects inherent limitations in their current model's ability to assess a resource like wind," said Gilbert.
What's more, some claim that the AEO 2018 fails to correct for a misguided assumption of recent editions of the outlook: the belief that electricity demand will resume growing after years of flat-to-declining loads.
"After decades of slowing growth, electricity use is expected to grow steadily through 2050," the report concluded. That struck many observers as an assumption that is not only flawed but also calculated to benefit utility planners bent on adding new capacity, particularly natural gas-fired plants, to a grid already oversupplied with power generation capacity in many regions.
The outlook says that "even though load growth has been flat/negative through the entire [economic] recovery, load will magically start growing again," tweeted Michael Wara, director of the Climate and Energy Policy Program at the Stanford Woods Institute for the Environment. "At some point, you have to look at the world/data instead of your map/model."
Finally, AEO 2018 projects power generation from coal, which has collapsed since 2008, flattening and persisting at around 1,200 billion kWh a year all the way to midcentury. Retirements of coal plants show no sign of slowing, and many people including utility executives expect that contraction to continue apace.
In general, EIA's model is no better than the assumptions fed into it. Those assumptions continue to be more conservative than the dramatic and ongoing transformation of the energy system many observers expect.
"EIA's scenario cases give a false impression that they're looking at a full spectrum of possible futures," said Daniel Cohan, an associate professor of civil and environmental engineering at Rice University. "But in fact, those scenarios only touch on a few conditions that might change, focusing on economic growth and oil and gas prices and supply."
That leaves several unanswered questions: What if retirements of aging, uneconomic coal power plants accelerate, rather than slow or halt? What if prices for wind, solar power or electric cars continue to fall much faster than expected? What if a national carbon tax, in some form, is implemented? The answers will dramatically affect the power sector in the coming decades, but they are not to be found in the AEO.