EIA Distorts Energy Forecasts, Part 1

EIA Distorts Energy Forecasts, Part 1

What’s happening at the Energy Information Administration (EIA)?

Are holdovers from the last administration producing reports that undermine this administration’s energy policies?

The EIA has just issued its latest Annual Energy Outlook, AEO 2018, and it contains a plethora of misinformation.

This and the next two articles will highlight a few of the more egregious items of misinformation.

It’s a mistake for any business or political entity to rely on the EIA energy forecasts.

It should also be noted that the focus of the latest annual energy outlook is on CO2 emissions. According to the latest AEO, CO2 emissions will remain constant through the forecast period ending in 2050.

This substantiates the fact cited in Nothing to Fear that it’s impossible to cut CO2 emissions.

EIA Distorts Cost of Electricity

The EIA predicts that the cost of electricity will decline by 2050 due to the low cost of wind and solar.

Chart from EIA Annual Energy Outlook 2018, issued February 2018

If wind and solar generation increase, as forecast by EIA, the cost of electricity will increase … Not decrease.

Holdovers at the EIA have assumed that the cost of wind and solar will be lower than the cost of electricity using natural gas or coal, and this is a huge error.

In addition, the EIA forecasts that wind and solar will dominate the growth in power generation, accounting for two-thirds of the growth in power generation.

Chart from EIA Annual Energy Outlook 2018, issued February 2018

If the EIA forecast is accurate, it’s clear the cost of electricity will increase substantially.
California, New York, and the New England states, which emphasize renewables, have much higher costs for electricity than do states that rely on coal and natural gas for generating electricity.

Those facts are abundantly clear and were available to the EIA when it created this distorted report.

These facts are accentuated by the EIA forecast growth for renewables, which is predominantly for PV solar, an extremely expensive method for generating electricity.

Chart from EIA Annual Energy Outlook 2018, issued February 2018

Not only is PV Solar expensive, it requires storage, which, at a minimum, doubles the cost of electricity.

In addition, the EIA has created a new measurement, Levelized Avoided Cost of Electricity (LACE) to justify its cost estimates.

“The calculation of avoided costs is based on the marginal value of energy and capacity that would result from adding a unit of a given technology to the system as it exists or is projected to exist at a specified future date and represents the potential value available to the project owner from the project’s contribution to satisfying both energy and capacity requirements.”

LACE uses marginal cost, which ignores total costs. See, The System is Rigged.


The EIA has become an albatross left over from the Obama administration, distorting facts to promote renewables and the cutting of CO2 emissions.

Any organization that uses the EIA’s forecasts are perpetuating misinformation and promoting distortions in the economy.

It should be noted that Navigant Research has embraced the EIA information and published articles extolling the EIA forecasts.

The EIA is an excellent example of what happens when ideologues assume responsibility for a government administration that is supposed to provide accurate information to the public.

Hopefully, the Department of Energy (DOE) will take steps to eliminate the biases prevalent at the EIA.

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4 Replies to “EIA Distorts Energy Forecasts, Part 1”

  1. I’m involved closely with EIA AEO working groups…I’ve been working with them to point out problems with their forecast. One of the major issues is they use historical T&D spending in their forecast. Every utility in the country is announcing $billions in T&D spend to support all the renewables going in. When you replace a coal plant near a load center with a wind plant in the middle of nowhere,. you have to spend a lot of money to get the power to the load. Another issue they don’t account for is ancillary services. Wind and solar do not support the grid like other resources do. Electric utilities love renewables. They cost more and they get to add a small fortune in T&D infrastructure. All those higher costs go straight into rates…higher ratebase means they make more money.

    • Thanks for your comments.
      No question, there are extra costs with wind and solar.

  2. As said by the previous commenter, increasing wind and solar clearly require increased costs in transmission/distribution.
    I bet the decreased cost in production assumes only renewable costs when they are producing, and NOT cost of either storage or maintaining fossil fuel (or nuclear) power facilities to furnish power when they are not. This is the biggest “hole” renewable advocates fall into.