A deep study of the world’s coal-fired power plants finds that the electric generating technology of yesteryear is increasingly more costly than wind and solar power. The new study from Carbon Tracker analyzed the profitability of 6,685 coal plants worldwide and found that 42 percent of them are already operating a loss and it would be cheaper to replace 35 percent of coal plants with renewable energy.
Over a two-year period the Carbon Tracker, an independent financial think tank, analyzed the profitability of existing coal plants, representing 95 percent or 1,900 gigawatts of power online as well as 90 percent or 220GW of coal plants now under construction. It found that not only are 42 percent of coal plants not operating profitably now, but by 2030 fully 96 percent will no longer operate profitably.
“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 minimizes losses,” said Matt Gray, head of power and utilities at Carbon Tracker and report co-author. “This analysis provides a blueprint for policymakers, investors and civil society.”
The report shows that it makes more sense economically to close coal plants, as required under the Paris Climate Agreement and challenges the need for new coal plants. Already wind and solar power are cheaper to operate in the US than coal, new studies are finding and reaffirming.
The report found that if countries closed down these costly dinosaurs, it could lead to significant savings. It found the US could save $78 billion and the EU could save $89 billion, while China could save a whopping $389 billion.
“Our analysis shows a least-cost power system without coal should be seen as an economic inevitability rather than a clean and green nicety,” stated Sebastian Ljungwaldh, Carbon Tracker energy analyst and report co-author.
The report found that the high costs of coal are already making 42 percent of coal plants more costly than wind, solar, and even natural gas plants. As the price of wind and solar power continue to drop and existing carbon pricing and air pollution regulations drive up costs for coal, the report argues, coal will become less profitable to use as a power source.
As such coal plants could become stranded assets, which would mean they’re not able to earn an economic return that was assumed when they were built and invested in. Carbon Tracker noted that in markets like the US and Europe, where energy producers are subject to competition, this could result in their closure—“unless they can secure government subsidies or a delay or reduction in environmental regulations.”
“In countries such as China, India, Japan and parts of the US governments typically approve the cost of generation and pass it on to consumers. Backing coal in the long-term will threaten economic competitiveness and public finances, because politicians will be forced to choose between subsidizing coal power or increasing power prices for consumers,” the study stated.
The organization recommended that governments and power producers should develop plans to phase out coal starting with the most costly, first. It recommended banning investments in new coal plants when it is cheaper to build renewable energy or gas-powered electric generating plants. It also noted that in Europe, the US, India and parts of Latin America, renewables and gas are already cheaper than coal.
As part of the report Carbon Tracker introduced an interactive portal. “Our coal portal offers a powerful response to those governments and asset owners who are unwilling or unable to disclose timely and accurate data,” explained Laurence Watson, Carbon Tracker data scientist and co-author.
The organization said it assessed the profitability of each coal plant based on operating costs. It accounted for fuel, maintenance costs as well as additional investments that will be required to meet additional environmental standards and carbon pricing—only where relevant.Tweet