In their Annual Energy Outlook for 2016, the Energy Information Agency is frighteningly off base in their projections for increased electricity use due to electric vehicles. They project negligible increases in electricity use for transportation through to the year 2040. If our policy makers rely on the EIA for their data they will be caught completely off guard as the oil industry unravels over the next decade.
It is very troubling that EIA expects Electric Vehicles will have a negligible impact on electricity sales through 2040. Bloomberg (BNEF) projects that roughly 400 Million EVs will be on the road by 2040. If 100 million of these are in the US and we assume they average 5 kwhr per day then that represents an increase of about 800 TWhr annually or roughly a 20% increase in electricity demand. Because of the inelasticity of the oil market, BNEF is projecting major shocks to the oil industry as early as 2024.
It is important to recognize that the BNEF data was released in February, before the Tesla Model 3 received 400,000 preorders with deposits. This was far in excess of even Elon Musk’s expectations and has led to a rethink of how rapidly EVs are going to disrupt the transportation market.
One can only hope that congressional staffers look beyond EIA for their projections. It begs the question, why do we pay them to do something that they have consistently shown they are unable to do? We can only hope that there is reform in EIA or that they stop doing the projections. Policy with enormous impact is based, in part, on EIA data and with the disruptive changes that are emerging in the energy industry it is time that they reform or get out of the projection business.