60% of global coal power plants are currently generating electricity at a higher cost than renewables.
Carbon Tracker, a financial think tank, in a report called ‘How to Waste Half a Trillion Dollars’, states that over 60% of global coal power plants are currently generating electricity at a higher cost than renewables. It concludes that by 2030, at the latest, it will be cheaper to build new wind or solar capacity than continue operating coal in all markets.
Carbon Tracker warns coal developers that they risk wasting more than $600 billion because it's already cheaper to generate electricity from new renewable sources than new coal plants in all major markets. It calculates that approximately two thirds of operating coal capacity in China costs more than renewables, whilst in India and the US, this figure drops to 50%.
“Renewables are outcompeting coal around the world and proposed coal investments risk becoming stranded assets which could lock in high-cost coal power for decades,” said Matt Gray, Carbon Tracker co-head of power and utilities and co-author of the report.
A ‘stranded asset’ is an economic term for an asset which ceases to generate returns even before the end of its economic life. “The market is driving the low-carbon energy transition but governments aren’t listening. It makes economic sense for governments to cancel new coal projects immediately and progressively phase out existing plants,” said Gray.
In other words, the report explains that the free-market is driving the renewable energy revolution more than world government policy. So, if government policy intensifies the shift to renewables - and the general concensus is that this is almost certain to happen - the number of stranded assets will multiply.
Happily, coal is closest to becoming obsolete in Europe where significant investment in renewable energy has created a very unfriendly market for coal, as OGN Daily reported in The End of King Coal.
Encouragingly, the report forecasts that the big coal consuming nations are “not far behind,” thanks to “excellent renewable energy resources in the US, low capital costs in China and least-cost policy making in India.”