Energy Monitor

Over 800 coal-fired power plants could be decommissioned in the developing world – report

An IEEFA report has detailed how an additional 800 coal fired power plants across the world could be profitably shut down.

Of the world’s coal-fired power generation capacity, 10% is scheduled to be decommissioned by 2030, but this number could increase if governments, investors and philanthropists are willing to identify and invest in opportunities, according to a new report released by the IEEFA.

Specifically, there is the opportunity to shut more than 800 coal-fired power plants in emerging economies and profitably replace them with solar energy, starting from the end of the current decade.

The report suggested that the coal-to-clean transition can take place without extensive government subsidies as there will be opportunities for private companies to make profit.

“While philanthropy may need to partially subsidise the first deal or promise to take first losses to get the first deal over the line to convince the market that it is feasible, economics are lining up for private capital and utilities to proactively source and finance these deals. It is estimated that a positive economic return beats the weighted average cost of capital for the projects identified,” the report said.

Currently, around 15.5 billion tonnes of carbon dioxide is generated every year by 2TW of coal-fired power. The International Energy Agency stated that in order to achieve net-zero emissions by 2050, a complete coal phase-out will be required by 2040.

Large debts that still need paying off and power purchase agreements (PPAs) that commit coal plants to supplying electricity over decades have made it more costly to transition away from coal.

“The key problem here is a lack of a pipeline of well defined, contracted, bankable coal-to-clean transactions,” said Paul Jacobson, lead author of the IEEFA report.

Nevertheless, the IEEFA identified 800 coal-fired power plants in developing countries, 600 of which were built 30 years or more ago, that have paid off debts and are not tied down by lengthy PPAs. Such plants could feasibly be decommissioned.

While decommissioning can be a challenge, some countries – notably, European countries – have been successful and are mostly on track with their coal phase-out targets. Speaking to Power Technology, Andy Brogan, EY Parthenon’s energy sector lead, said: “Countries have set their objectives, and they just seem to be moving towards them.”