Skeptics of renewables sometimes cite data from EIA (The US Department of Energy’s Energy Information Administration) or from the IEA (the OECD’s International Energy Agency). The IEA has a long history of underestimating solar and wind that I think is starting to be understood.
The US EIA has gotten more of a pass. The analysts at EIA are, I’m certain, doing the best job they can to make reasonable projections about the future. But, time and again, they’re wrong. Solar prices have dropped far faster than they projected. And solar has been deployed far faster than they’ve projected.
Exhibit A. In an update on June 2015, the EIA projected that the cheapest solar deployed in 2020 would cost $89 / mwh, after subsidies. That’s 8.9 cents / kwh to most of us. (This assumes that the solar Investment Tax Credit is not extended.)
Here’s the EIA’s table of new electricity generation costs. I’ve moved renewables up to the top for clarity. Click to see a larger version.
How has that forecast worked out? Well, in Austin, Greentech Media reports that there are 1.2GW of bids for solar plants at less than $40/mwh, or 4c/kwh. And there are bids on the table for buildouts after the ITC goes away at similar prices.
That’s substantially below the price of ~$70/mwh for new natural gas power plants, or $87/mwh for new coal plants.
And the prices continue to drop.
The reality is that solar prices in the market are less than half of what the EIA projected three weeks ago.
When you hear numbers quoted from EIA or IEA, take this into account. As well-meaning as they may be, their track record in predicting renewables is poor, and it always errs on the side of underestimating the rate of renewable progress.
There’s more about the exponential pace of innovation in solar, storage, and other technologies in my book on innovating to beat climate change and continue economic growth:The Infinite Resource: The Power of Ideas on a Finite Planet