Estimation of the year-on-year volatility and the unpredictability of the United States energy system

Abstract

Long-term projections of energy consumption, supply and prices heavily influence decisions regarding long-lived energy infrastructure. Predicting the evolution of these quantities over multiple years to decades is a difficult task. Here, we estimate year-on-year volatility and unpredictability over multi-decade time frames for many quantities in the US energy system using historical projections. We determine the distribution over time of the most extreme projection errors (unpredictability) from 1985 to 2014, and the largest year-over-year changes (volatility) in the quantities themselves from 1949 to 2014. Our results show that both volatility and unpredictability have increased in the past decade, compared to the three and two decades before it. These findings may be useful for energy decision-makers to consider as they invest in and regulate long-lived energy infrastructure in a deeply uncertain world.