Nearly Half of Coal Plants Will Be Unprofitable This Year
A report has been released stating that 46% of the globe’s coal-fired power plants will be unprofitable in 2020, based on estimated revenues from wholesale power markets, capital markets, running costs and pollution policies.
The report comes courtesy of Carbon Tracker, who writes that the number will rise to 52% by the end of the decade. The data was crunched by the London-based think tank after analysing outputs and costs associated with 95% of the globe’s current and planned coal-fired power plants. A total of 6,685 coal plants were tallied worldwide, which Carbon Tracker says remains one of the most accurate representations of the lack of cost-effectiveness of coal-fired plants.
“Our analysis shows a least-cost power system without coal should be seen as an economic inevitability rather than a clean and green nicety.” Sebastian Ljungwaldh
As it stands, around 42% of the global coal-fired electricity generation market is running at a net loss. This figure is estimated to rise to 72% by 2040, as developed nations continue to introduce carbon pricing and pollution regulations, divesting away from coal and into renewables.
China was a focal point of the report, considering it was over 1,000GW of coal-fired power currently in use, which accounts for around 60% of the country’s total generation capacity. China consumers half the globe’s coal, and has a further 100GW under construction.
That will translate to around 60% of China’s existing coal-fired plants running at a loss. The authors state that China would be able to save $389 billion by closing plants in line with the Paris Climate Agreement instead of pursuing business as usual plans.
The report states that it costs more to run 35% of current coal-fired power plants than to build new renewable generation, and by 2030 building new renewable energy sources will be cheaper than continuing to operate 96% of today’s existing and planned coal plants.
Under the same timeline, the European Union would save $89 billion, the United States would save $78 billion and Russia could save up to $20 billion. South Korea would see savings of $92 billion, while India and South Africa would save $76 and $51 billion respectively.
The authors add that “consumers and taxpayers are keeping coal profitable in many regulated markets by picking up the bill to support uneconomic coal plants. A phase-out could save them billions, but would hit coal owners’ profits.”
Matt Gray, co-author of the report and Carbon Tracker’s head of power and utilities said that “the narrative is quickly changing from how much do we invest in new coal capacity to how do we shut down existing capacity in a way that minimises losses. This analysis provides a blueprint for policymakers, investors and civil society,” he said.
“The narrative is quickly changing from how much do we invest in new coal capacity to how do we shut down existing capacity in a way that minimises losses." Matt Gray
The United Nation’s Intergovernmental Panel on Climate Change has previously warned that around 59% of the world’s coal-fired plants must be retired by the turn of 2030 in order to limit global warming to 1.5-degrees centigrade.
Co-author and Carbon Tracker analyst, Sebastian Ljungwaldh said “our analysis shows a least-cost power system without coal should be seen as an economic inevitability rather than a clean and green nicety.”