More coal plants across the world are now operating at a loss, and in the not-too-distant future, nearly all will be more expensive to run than renewable energy sources, according to a report by the Carbon Tracker Initiative.
Nearly half (42 percent) of the global coal capacity operating today could be losing money due to high fuel costs, according to the London-based financial think tank, which defines profitability as revenues minus long-run operating costs. By 2040, Carbon Tracker estimates 72 percent of the global fleet will be “cashflow negative” because a combination of renewable energy costs, air pollution regulation and carbon pricing will increasingly exacerbate cost pressures.
“This scenario assumes fuel costs will fall over 10% (on average) after 2018 and only includes existing climate and air pollution policies,” the nonprofit writes. “This will likely prove too conservative, especially due to the continued politicization of air pollution.”
Carbon Tracker created an interactive portal that covers 6,685 coal units comprising about 95 percent of the current global operating capacity and about 90 percent of the capacity under construction. The portal provides current and forward-looking estimates of the (short- and long-run) operating cost, gross profitability, relative competitiveness, phase-out year and stranded asset risk in a below-2°C-warming scenario.
The nonprofit also found 35 percent of the current coal capacity likely has a higher operating cost than new renewables, and by 2030, nearly all (96 percent) of the coal capacity will be more expensive to run than renewable sources.
“The challenge for policymakers at this point is no longer whether renewable energy will be the least cost option, but rather how to integrate wind and solar to maximize system value,” the nonprofit writes.
Carbon Tracker also found that, in a below-2°C-warming scenario, there could be a risk of $267 billion of stranded assets globally.
“In both liberalized and regulated markets, the economics of power generation will continue to change much more quickly than expected and in favor of low-carbon technologies,” the nonprofit writes. “This transition will expose governments and investors—both equity and debt—to material financial risk. Equally, governments and investors have opportunities to be agents of change and to ensure an ordered transition.”
Meanwhile, in an effort to reduce the risk of operating losses within the U.S. coal industry, the U.S. Department of Energy (DOE) last month announced that it would fund competitive research and development efforts to advance “first-of-a-kind coal generation technologies,” as part of the agency’s Coal FIRST (Flexible, Innovative, Resilient, Small, Transformative) initiative to develop “the coal plant of the future needed to provide secure, stable, and reliable power.”
The department envisions that the future coal fleet may be based on electricity generating units possessing many of the following traits:
- High overall plant efficiency (40-percent+ HHV or higher at full load, with minimal reductions in efficiency over the required generation range)
- Small unit sizes (approximately 50 to 350 megawatts), maximizing the benefits of high-quality, low-cost shop fabrication to minimize field construction costs and project cycle time
- Near-zero emissions, with options to consider plant designs that inherently emit no or low amounts of carbon dioxide (amounts that are equal to or lower than natural gas technologies) or could be retrofitted with carbon capture without significant plant modifications
- Capable of high ramp rates and minimum loads commensurate with estimates of renewable market penetration by 2050
- Integration with thermal or other energy storage (e.g., chemical production) to ease intermittency inefficiencies and equipment damage
- Minimized water consumption
- Reduced design, construction and commissioning schedules from conventional norms by leveraging techniques including but not limited to advanced process engineering and parametric design methods for modular design
- Enhanced maintenance features including technology advances with monitoring and diagnostics to reduce maintenance and minimize forced outages
- Integration with coal upgrading or other plant value streams (e.g., co-production)
- Capable of natural gas co-firing.
In FY 2019, the DOE plans to issue three competitively funded research and development efforts, which could “ultimately culminate in the design, construction, and operation of a coal-based pilot-scale power plant.”
“The Coal FIRST initiative will make coal-fired power plants in the future more adaptive to the modern electrical grid,” the agency states. “The initiative will integrate early-stage R&D on power plant components with currently available technologies into a first-of-a-kind system. Through innovative technologies and advanced approaches to design and manufacturing, the initiative will look beyond today’s utility-scale power plant concepts (e.g. base-load units) in ways that integrate with the electrical grid in the United States and internationally.”
Michelle Bloodworth, CEO of the American Coalition for Clean Coal Electricity, told Utility Dive that the trade group is “very supportive of demonstration technology of small, modular coal units.”
The DOE’s funding is a “step in the right direction. ... We do need a coal fleet for the future, for reliability, resilience, affordability and diversity,” Bloodworth said.