The Price of Being Politically Innocuous

By Kolby Hoagland | July 26, 2013

When it comes to the price of an energy project, biomass power is often viewed as having a difficult time competing with natural gas and coal based power production. Conventional fossil fuels have a longstanding foundation as the primary fuels for electricity production and a lower levelized energy cost than biomass power, according to EIA. The EIA estimates that a biomass power plant entering service in 2018 will cost $108 per MWhr on national average. Compared to conventional coal ($100/MWhr) and conventional combined cycle natural gas ($67/MWhr), the EIA estimates that conventional fossil fuel plants will be more cost competitive that biomass power. While the EIA does include recent Clean Air rules and legislations into their levelized cost modules for power production, the EIA neglects to include market trends and likely future legislation as possibilities into their projections. Their reason for not doing so is unstated but understandable. Any projection that they release that leans towards one energy source will be seen by elected representatives that are opposed to that energy source as ‘biting the hand that feeds them.’ The EIA’s political abstinence from broader projections by including current market and political trends as a potential outcome is logical given their role as reporter of current realities in the energy sector to congress and the executive branch. By remaining politically innocuous, the EIA stays out of unnecessary and wasteful congressional hearings, but it comes at the cost of missing realistic predictions that offer a broad scope of pragmatic energy pathways. For example, there is a broad movement in Europe and the U.S. to move away from coal and inefficient natural gas generation, but much of these trends are omitted by EIA’s modules for the sake of not offending those in congress with strong ties to these industries. The EIA must walk a political tightrope of making projections while attempting not to offend the many stakeholders that make up the energy sector, particularly those that are politically active. Unfortunately, the balance required to stay on this political tightrope leads to narrow projections that do not realistically predict market realities.