Why We Fail to Correctly Project Renewable Energy Growth

There’s an interesting discussion going on in the blogosphere over why energy experts "failed to predict" massive growth in renewable energy over the past decade. David Roberts speculates that it’s because renewable energy is technologically dynamic and often distributed – two things that, he says, we’re bad at modeling. Paul Krugman sees something much uglier at work: capture (“both crude and subtle”) of energy experts by fossil fuel interests.

But there’s a much more mundane explanation: The sources that Roberts and Krugman point to as evidence of chronically underestimated renewable energy growth weren’t trying to predict the future. The sources – mostly the Energy Information Administration (EIA) and the International Energy Agency (IEA) – were explicitly tasked with modeling future developments assuming no changes in policy. Renewable energy has taken off precisely because of changes in policy. The EIA and IEA weren’t wrong – they just weren’t modeling what Roberts and Krugman suggest they were.

Don’t believe me that the difference is mostly about policy? Consider this: Wind installations dropped close to zero in each year that the production tax credit (PTC) expired. That’s because building wind farms doesn’t make sense without supportive policy. But the EIA and IEA modelers were specifically projecting the future assuming that the PTC would not exist.

To be certain, Roberts cites expert projections that weren’t from the EIA or IEA. “In 2002,” he writes, “a top industry analyst predicted an additional 1 gigawatt annual market [for solar] by 2010. The annual market in 2010 was 17 times that at 17 gigawatts.” But one analyst does not constitute a collective failure; moreover, the large growth in solar was driven by large-scale installations, not by distributed generation. He also reports that “In 2000, the European Wind Energy Association predicted Europe would have 50 gigawatts of wind by 2010 and boosted that estimate to 75 two years later. Actually, 84 gigawatts of wind power were feeding into the European electric grid by 2012.” Perhaps Krugman can explain how the European Wind Energy Association succumbed to capture by fossil fuel interests.

There’s an important lesson here. Some people seem convinced that falling prices are the reason that renewable energy has done so well in recent years. They’re certainly part of the story, but without supportive policy that wasn’t in place a decade ago, renewables wouldn’t have done nearly as well. If we want more renewable energy in the coming years than the EIA and IEA currently project, we’re going to need new and more robust policies too.