The International Energy Agency, or IEA for short, is an autonomous intergovernmental organization based in Paris. They were established in the 1970’s after the OPEC embargo sent oil prices to new highs. Their main job is to guess the future when it comes to energy production. They do this in their annual World Energy Outlook or WEO.
I’ve tended to trust their predictions, since they seem to have a lot of expertise and don’t seem to have a strong axe to grind. They believe global warming is a serious problem and they’ve outlined some plans for what to do.
However, I’m now convinced that they’ve consistently underestimated the growth of renewable energy. Not just a little—a lot.
This is bad news in a way: who can I trust now? But of course it’s mainly good news! I am now more optimistic about the potential of wind and solar power.
To explain what I mean, I’m just going to quote a chunk of this article:
• David Roberts, The International Energy Agency consistently underestimates wind and solar power. Why?, Vox, October 12, 2015.
David Roberts on the IEA
That the IEA has historically underestimated wind and solar is beyond dispute. The latest look at the issue comes from Energy Post editor Karel Beckman, who draws on a recent report from the Energy Watch Group (EWG), an independent Berlin-based think tank. The report analyzes the predictive success of previous WEOs.
Here’s the history of additions to electric generation capacity by renewables excluding big hydro, along with successive WEO projections:
[Chart from Energy Watch Group. Click to enlarge.]
As you can see, IEA keeps bumping up its projections, but never enough to catch up to reality. It’s only now getting close.
It gets even worse when you dig into the details. Here’s the bill of particulars:
• WEO 2010 projected 180 GW of installed solar PV capacity by 2024; that target was met in January 2015.
• Current installed PV capacity exceeds WEO 2010 projections for 2015 by threefold.
• Installed wind capacity in 2010 exceeded WEO 2002 and 2004 projections by 260 and 104 percent respectively.
• WEO 2002 projections for wind energy in 2030 were exceeded in 2010.
Other, independent analysts (like those at Bloomberg New Energy Finance and Citi) have come closer to accurately forecasting renewables. The only forecasts that match IEA’s inaccurate pessimism are those from the likes of BP, Shell, and Exxon Mobil.
Here are IEA’s wind and solar projections broken out, from a 2014 post by the folks at eco-consultancy Ecofys:
[Click to enlarge.]
Back in 2013, energy analyst Adam Whitmore took a look at the IEA’s track record on renewables. He found it abysmal, like everyone else. This year, he returned to the WEO to see if it has improved and found that, well, it hasn’t.
Here he shows the rate of growth in annual installations of renewables, and what the IEA projects for the future:
[Click to enlarge.]
(The dashed lines are the standard WEO projections, what happens if nothing changes. The dotted lines are from the “bridge scenario” in the WEO Special Report on Energy and Climate Change, which is supposed to represent some policy ambition.)
As Whitmore says, it’s possible that the rate of solar PV installations will suddenly plunge by some 40 percent and then enter a long steady-state period, but there’s no reason to think it’s particularly plausible.
Roberts goes on to analyze various possible reasons for the IEA’s consistent underestimates. They’re worth reading, but none of them seems like an obvious smoking gun.
I suppose if I were very careful I would check all the graphs and numbers in Roberts’ article, but I’m inclined to trust them. He’s getting them from various sources; this is a factual issue that can be easily checked, and I haven’t seen anyone arguing the other side.
If you want to check some numbers yourself, you can download these free books:
• WEO 2011.
• WEO 2010.
• WEO 2009.
• WEO 2008.
• WEO 2007.
• WEO 2006.
The following report, mentioned above, goes into more detail about the IEA’s failures:
• Matthieu Metayer, Christian Breyer and Hans-Josef Fell, The projections for the future and quality in the past of the World Energy Outlook for solar PV and other renewable energy technologies, Energy Watch Group, 2015.
Summing up, the IEA keeps ignoring the exponential growth of new renewable energies such as solar and wind, and does not learn from its past mistakes.
But this leaves me with a question. Who is doing the best job of predicting energy trends? This is where we could really use a well-developed, easily accessed prediction market.