Why Energy Experts Get Things Wrong So Often

After the unpredicted fall of the Soviet Union in the late 1980s due primarily to an oil price shock, Philip Tetlock, a U.S. psychologist, started to question the wisdom of experts.

It seemed rather incredible to Tetlock that political commentators, including Soviet scholars, had uniformly failed to forecast the dissolution of the world's second mightiest empire. Tetlock wondered why and how they could be so blind and dumb?

So the psychologist assembled 234 experts, including government forecasters, university professors, "talking head" journalists, and economists.

All together the group made approximately 28,000 expert predictions about everything from economic growth to nuclear proliferation. Tetlock then compared the accuracy of the experts to dilettantes, dart-throwing chimps, and computer algorithms.

Sadly, the experts did only slightly better than the "proverbial dart-throwing chimpanzee," and a lot worse than mathematical equations predicting business as usual.

The findings astounded academia, but were ignored by the mass media. In fact, the modern news machine devotes a majority of its space to so-called economic and political experts who remain about as authoritative as a gaggle of unaccountable bonobos in an Irish pub.

However, Tetlock found two distinguishable groups of thinkers among the experts: hedgehogs and foxes.

The hedgehogs, which tend to dominate the airways, behaved in an authoritative manner and overconfidently relied on one source of information. In other words, they knew one thing well.

In contrast, the foxes, a humble lot rarely sought out by reporters, cautiously drew from a diversity of sources. Not surprisingly, the foxes produced more accurate judgments than the hedgehogs.

These findings taught Tetlock, the author of Expert Political Judgment, a few lessons about pundits. They "were hard pressed to do better than chance, were overconfident, and were reluctant to change their minds in response to new evidence. That combination doesn't exactly make for a flattering portrait of the punditocracy," he recently told Edge.org.

Tetlock also concluded that experts weren't really in the business of making accurate predictions, but served entrenched multi-billion dollar forecasting industries.

These paid prognosticators are "in the business of flattering the prejudices of their base audience and they're in the business of entertaining their base audience." Accuracy is about the last thing many an expert worries about these days.

Now, Tetlock's insights apply to energy analysts in barrels. Oil price predictors and forecasters get things so wrong that energy and business reporters have unwittingly become pipelines for misinformation as black as bitumen.

University of Manitoba scholar Vaclav Smil, a genuine energy fox, devoted an entire chapter in one of his many energy books (Energy At the Crossroads) to the phenomenon and called it "Against Forecasting."

(An historical aside: prior to the advent of cheap fossil fuels, energy forecasting really didn't exist: there were slave and animal audits as well as ship inventories, but no clique of energy forecasters.)

Too complex to predict

Given the grim historical record on modern energy forecasting, Smil refuses to engage in the game. In fact, Smil offers only one energy prediction: "We will spend more time and money on playing the future game" and most predictions will continue to be dead wrong.

Energy systems are so large and complex that unpredictable political events, economic disasters, disruptive technologies and public policy changes can quickly alter the course of events. More

 

The Race To Harness Himalayan Hydropower

Spend a day in Kathmandu, Nepal's sprawling capital of 4-million people, and you'll quickly notice what has long been a fact of life in this landlocked Himalayan country, and many other South Asian nations - no reliable electricity supply exists.

Up to eight times a day, neighborhoods throughout the city suffer rolling power cuts due to load shedding, causing residents and businesses alike to either carry on in the darkness, or rely on expensive, diesel-consuming generators to keep the lights on. Although the country's civil war ended in 2006, carrying the promise of restored domestic stability and accelerated economic development, Nepal's economy has remained hamstrung by an inconsistent energy supply, with only 40 percent of the population having access to electricity. This situation persists despite the fact that the country sits on top of a virtual goldmine - an estimated 80,000 megawatts (MW) of untapped hydroelectricity, of which it has harnessed a scant 700 MW.

Nepal's great untapped hydropower potential has not gone unnoticed. Neighbors India and China actively have courted the country for years, seeking dam construction contracts and energy export deals to help meet their own soaring domestic energy needs. But while some Nepalese hydroelectric projects have moved forward, some of the country's more ambitious hydroelectric development plans have been delayed or scrapped altogether since 2006, owing to Nepal's notoriously fractious internal politics, and persistent social unrest near proposed dam-construction sites in rural areas formerly sympathetic to the Maoist insurgency. One reason for the impasse surrounding many major hydroelectric projects is that Nepal has long been wary of foreign meddling in its internal affairs, which has meant that Indian and Chinese efforts to bankroll major infrastructure projects are automatically viewed with suspicion.

India and China have become locked in competition to ink construction contracts in Bhutan and Burma as well, two countries similarly spanned by the Himalaya that possess substantial undeveloped hydroelectric resources. Bhutan and Burma have both embraced the idea of heightened hydroelectric development, reflecting a different attitude than Nepal's regarding both energy infrastructure and foreign contractors. Bhutan would benefit greatly from increased domestic power production, given that it now uses only 390 MW of its 30,000 MW hydropower potential (or 1.3 percent). Even at that modest level of development, hydropower has already emerged as one of the mainstays of the Bhutanese economy, alongside tourism. However, the country currently lacks the technical resources to further bolster its hydroelectric capacity, a vacuum that state-owned Indian energy firms have rushed to fill. Indian firms have competitive advantage over in China in this regard, as Chinese-Bhutanese relations have remained tense over the years due to persistent quarreling over contested border areas. As a result, many of the country's high-profile hydroelectric projects - such as the 2,500 MW Sankosh River Hydropower project, slated to become the world's fifth tallest dam upon completion in 2016 - are contracted to Indian companies.

Burma, meanwhile, represents one of the last major untapped sources of hydroelectricity in South Asia. From Burma's point of view, developing energy resources in the country's mountainous north - where many proposed hydroelectric sites lie - is strategically important for two reasons. Firstly, developing some of the country's estimated 40,000 MW of hydroelectric potential would help shore up domestic energy supply in this country of 54 million, which is slated to grow to 61 million by 2025, and nearly 71 million by 2050. Currently, Burma has harnessed only 2,440 MW, or six percent of this potential. Secondly, excess hydroelectricity produced in this region could be sold to consumers in adjacent Yunnan province (China) and Assam state (India), two economically underdeveloped regions bordering Burma that would benefit greatly from a more reliable energy supply. More