Is predicting the future getting harder?

In 2016, the world was first surprised by the UK’s decision to leave the European Union and later also by Trump getting elected as the president of the United States. One of the main reasons these news struck most people by surprise was because the majority of the opinion polls were pointing in the opposite direction. Although the EU referendum was expected to be close, most polls predicted that the UK would remain within the union. In the US election, Clinton’s chances of victory were in many cases estimated to 70 % or more. Still, the UK decided to leave the EU and Clinton lost the presidential election. What followed were discussions on how the predictions could be so wrong. These discussions left me with the impression that some people have such trust in predictions and polls that they forget what they actually are: predictions.

“Prediction is very difficult, especially if it’s about the future.”

– Niels Bohr, Danish physicist

As a part of Statkraft’s market analysis department, this is something very important for me to remember. No matter how finely we adjust our models, or how well they work on historical data, we will never know for certain what the future will hold. Although tools for analysis and data handling are getting more advanced, the energy industry is also changing more rapidly than ever before. This becomes clear just by looking at last year’s price development of solar power where a new record was set in May at 2.99 US cents per kWh. This was beaten already in October, and then again in September at 2.91 and 2.42 cents per kWh. These are price levels that are far below what was anticipated a few years ago. At the beginning of  the year, Bloomberg New Energy Finance expected a price reduction between 5-7 % while in fact it was closer to 17 %. Also, the US Energy Information Administration, EIA, follows up the accuracy of their forecast and concludes that they in recent years have been off by roughly 30 % (even more if you only look at renewables).

“All models are wrong, but some are useful.”

– George Box, British statistician

So what trends and technologies will dominate 2017? Despite the political landscape there is an optimism that we passed a turning point in 2016 and that renewables will be able to support themselves . It is believed that the momentum for offshore wind that has been built up in the US is not slowing down despite Trump being president and that more countries will get on board the soon to be global boom of solar power. The trend of big international corporations investing to secure their power demand with renewables is also expected to continue. However,  there are conflicts among the predictions reminding us of the difficulties of predicting the future.

Some energy related predictions for 2017:

Renewable Energy World: Top 10 renewable trends to watch in 2017

So what trends and technologies do YOU think will be dominating the energy industry in 2017? What will be the determining factors? Feel free to leave a comment and share your view!

“The best way to predict the future is to invent it.”

– Alan Kay, US computer scientist

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