November 5, 2016 Read More →

On the Blogs: The International Energy Agency Remains Behind the Curve on Monitoring the Uptake of Renewables

Simon Evans for

Renewable energy capacity is growing more rapidly than expected, says the International Energy Agency (IEA), overtaking coal for the first time.

The IEA also says it has “significantly increased” its forecasts for the growth of renewable capacity over the next five years. Yet its forecasts continue to show future growth slowing down.

Carbon Brief looks at the latest IEA renewable forecasts and how they have changed.

Behind the curve

Every year, the IEA publishes a forecast for renewable energy over the next five years. Its latest report, the Medium Term Renewable Energy Market Report 2016, covers the period to 2021.

Previous iterations have consistently underestimated the growth of renewable energy. They consistently show growth declining in the first year of the forecast, then continuing at a steady, lower rate. In reality, renewables growth has increased in each year over the past decade.

This failing is not unique. The annual IEA World Energy Outlook, along with forecasts from many other organisations, have also missed the rapid growth and plummeting costs of renewables. Vox has a detailed look at why IEA forecasts have missed the mark.

This year, the IEA is countering the view that it is consistently behind the curve. In a move trailed in advance, it says it has “significantly increased” its five-year growth forecast for renewables.

The shift was given top billing in the IEA press release and reported by the publications, including the Financial Times, Bloomberg and Climate Home. But has it really changed its outlook?

On one level, the answer is yes. The IEA says renewable capacity will grow by 825 gigawatts (GW) over the next five years. This increase is 13% higher than the five-year forecast published in 2015.

For example in 2013, the IEA expected 132GW of renewables to be built in 2016. In 2015, it expected only 124GW. Now, it is forecasting 148GW of new capacity in 2016. These year-to-year changes in forecast additions are shown in the chart, below.

Flat Growth

There are signs that these changes are less significant than the IEA suggests, however. It is, perhaps, unsurprising that the IEA has raised its forecast additions. A record $286bn was invested in renewables in 2015, with the money buying a record 153GW of new capacity.

Fatih Birol, IEA executive director writes in a foreword to the report: “Despite low energy prices, 2015 was a year full of records for renewables. For example, cumulative installed renewable power capacity now exceeds that of coal.”

Yet, as in previous forecasts, the IEA once again expects the rising trend in renewable additions to come to an end. After the record 153GW in 2015, it sees 148GW of new renewable capacity being added in 2016, 134GW in 2017 and 131GW in 2018 (the yellow columns in the chart below).

IEA forecasts of annual renewable energy capacity additions versus actual growth. Source: Carbon Brief analysis of IEA Medium Term Renewable Market Reports 2013-2016. Chart by Carbon Brief using Highcharts.

Even as capacity growth continues to climb, the IEA continues to forecast flat growth. Christian Breyer, professor of solar economy at the Lappeenranta University of Technology in Finland, tells Carbon Brief: “I would say, honestly, it’s very similar to what we saw in the past from the IEA. I don’t see a major improvement…For the last 20 years, you always see the IEA only assumes the annual market will not grow. It was for all the last 20 years wrong.”

Prof Breyer has studied the history of IEA forecasts for the Energy Watch Group, a network of scientists and parliamentarians. It is “unbelievable”, he says, to assume flat growth for solar and wind when they are already the lowest cost sources of power in some regions. Breyer says: “Assuming a declining annual market for solar and wind in the next five years, knowing it’s the least cost source of electricity. Sorry, even my grandmother would not believe this.”

Breyer says IEA forecasts have a series of failings, including a conservative approach to future policy changes and exaggerated costs. He adds: “Their capex numbers are 20-30% too high”.

Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis (IEEFA), tells Carbon Brief:

“IEEFA would put the deflation in total installed system costs for solar as likely to continue at 5-10% annually, double the 4% pa rate the IEA forecasts. Therein lies the core problem. They will be upgrading their renewable energy forecasts again next year.”

How Have The IEA’s Renewable Forecasts Changed?

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