Energy
Experts are Hilariously Bad at Forecasting Solar Installations
For the latest data on the world’s energy markets, organizations such as the IEA (International Energy Agency) and the EIA (Energy Information Administration) are crucial sources. Every year, investors and entire industries rely on their reporting on energy supply and demand, as well as their forecasts going forward.
However, these organizations tend to be better at some things than others. For example, in terms of summing up past and current data on what is going on in the world, they generally do a pretty good job. We referenced their numbers when we looked at the changing anatomy of U.S. oil imports, or when showing the decline in coal use over recent years.
In other situations, such as trying to extrapolate numbers on current trends or predicting the tipping point of technologies, things get a bit dicier. Forecasting the roll-out of solar, in particular, has proved to be a daunting challenge for these organizations over the years.
Global Solar Installations
Before we dive in, we should make one thing clear: it’s notoriously difficult to make these types of predictions, and we do not envy the position of these researchers in any sense.
That being said, as shown in this chart from Auke Hoekstra, forecasts for annual global solar installations by the IEA have been egregiously bad for over a decade.
Forecasts from the IEA are pulled from their World Energy Outlook (WEO) reports, which are published each year. Meanwhile, the “PV History” line above is the actual data for photovoltaic (PV) installations each year.
Again, it’s extremely difficult to make such forecasts, and these organizations tend to be conservative with their outlooks. However, it’s pretty evident that they’ve missed a pretty significant trend here.
U.S. Solar Installations
Maybe the U.S. government can do better?
Here’s a look at forecasts by the EIA for annual energy production from solar in the U.S. over many decades, courtesy of Steffen Christensen:
This one’s more interesting. Instead of counting out solar each and every year, the EIA has had changing attitudes towards solar over time.
The projection from 1979 seems to actually be the most accurate – but the ones from 1994-2011 skip any premise of a solar boom entirely. As we get closer to present day, forecasts get more accurate, but are still too conservative (2013, 2015).
Hindsight is 20/20
It’s easy for us to be armchair critics, but it is not fair to rag on these organizations too much.
Here’s the trend they missed that made all the difference:
Curious to see how other people have fared in making predictions on technology throughout history?
Here’s a timeline of failed tech predictions that will humble any forecaster.
Energy
Charted: 4 Reasons Why Lithium Could Be the Next Gold Rush
Visual Capitalist has partnered with EnergyX to show why drops in prices and growing demand may make now the right time to invest in lithium.
4 Reasons Why You Should Invest in Lithium
Lithium’s importance in powering EVs makes it a linchpin of the clean energy transition and one of the world’s most precious minerals.
In this graphic, Visual Capitalist partnered with EnergyX to explore why now may be the time to invest in lithium.
1. Lithium Prices Have Dropped
One of the most critical aspects of evaluating an investment is ensuring that the asset’s value is higher than its price would indicate. Lithium is integral to powering EVs, and, prices have fallen fast over the last year:
Date | LiOH·H₂O* | Li₂CO₃** |
---|---|---|
Feb 2023 | $76 | $71 |
March 2023 | $71 | $61 |
Apr 2023 | $43 | $33 |
May 2023 | $43 | $33 |
June 2023 | $47 | $45 |
July 2023 | $44 | $40 |
Aug 2023 | $35 | $35 |
Sept 2023 | $28 | $27 |
Oct 2023 | $24 | $23 |
Nov 2023 | $21 | $21 |
Dec 2023 | $17 | $16 |
Jan 2024 | $14 | $15 |
Feb 2024 | $13 | $14 |
Note: Monthly spot prices were taken as close to the 14th of each month as possible.
*Lithium hydroxide monohydrate MB-LI-0033
**Lithium carbonate MB-LI-0029
2. Lithium-Ion Battery Prices Are Also Falling
The drop in lithium prices is just one reason to invest in the metal. Increasing economies of scale, coupled with low commodity prices, have caused the cost of lithium-ion batteries to drop significantly as well.
In fact, BNEF reports that between 2013 and 2023, the price of a Li-ion battery dropped by 82%.
Year | Price per KWh |
---|---|
2023 | $139 |
2022 | $161 |
2021 | $150 |
2020 | $160 |
2019 | $183 |
2018 | $211 |
2017 | $258 |
2016 | $345 |
2015 | $448 |
2014 | $692 |
2013 | $780 |
3. EV Adoption is Sustainable
One of the best reasons to invest in lithium is that EVs, one of the main drivers behind the demand for lithium, have reached a price point similar to that of traditional vehicle.
According to the Kelly Blue Book, Tesla’s average transaction price dropped by 25% between 2022 and 2023, bringing it in line with many other major manufacturers and showing that EVs are a realistic transport option from a consumer price perspective.
Manufacturer | September 2022 | September 2023 |
---|---|---|
BMW | $69,000 | $72,000 |
Ford | $54,000 | $56,000 |
Volkswagon | $54,000 | $56,000 |
General Motors | $52,000 | $53,000 |
Tesla | $68,000 | $51,000 |
4. Electricity Demand in Transport is Growing
As EVs become an accessible transport option, there’s an investment opportunity in lithium. But possibly the best reason to invest in lithium is that the IEA reports global demand for the electricity in transport could grow dramatically by 2030:
Transport Type | 2022 | 2025 | 2030 |
---|---|---|---|
Buses 🚌 | 23,000 GWh | 50,000 GWh | 130,000 GWh |
Cars 🚙 | 65,000 GWh | 200,000 GWh | 570,000 GWh |
Trucks 🛻 | 4,000 GWh | 15,000 GWh | 94,000 GWh |
Vans 🚐 | 6,000 GWh | 16,000 GWh | 72,000 GWh |
The Lithium Investment Opportunity
Lithium presents a potentially classic investment opportunity. Lithium and battery prices have dropped significantly, and recently, EVs have reached a price point similar to other vehicles. By 2030, the demand for clean energy, especially in transport, will grow dramatically.
With prices dropping and demand skyrocketing, now is the time to invest in lithium.
EnergyX is poised to exploit lithium demand with cutting-edge lithium extraction technology capable of extracting 300% more lithium than current processes.
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