LONDON – Four in five EU coal power plants are unprofitable and utilities could lose €6.6 billion this year alone, finds a new report from financial think tank Carbon Tracker.
Originally published 24 October 2019 here; contact information below at end of post.
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It warns investors and policymakers to prepare for a complete phase-out of coal by 2030, because without heavy subsidies the industry will not survive sustained competition from ever lower cost wind and solar power and temporarily cheap gas.
Governments will face “intractable problems” if they seek to support coal in the long-term because they will have to choose whether to: pass costs to the utilities and destroy shareholder value; pass costs to consumers and push bills up; or fund them from debt or taxes.
Matt Gray, Head of Power & Utilities at Carbon Tracker and co-author of the report, said:
“EU coal generators are haemorrhaging cash because they cannot compete with ever-cheaper renewables and gas and this will only get worse. Policymakers and investors should prepare to phase out coal by 2030 at the latest.”
Carbon Tracker used asset-level financial models to analyse the operating economics of every coal plant in the EU and the losses they face in 2019. It found that:
- Germany’s lignite and hard coal plants could lose €9 billion, yet the country’s coal commission has only recommended a 2038 deadline for phasing out coal.
- Spain and the Czech Republic, which have yet to set a phase-out date, face losses of €992 million and €899 million respectively. In the UK, which has set a 2025 deadline, its remaining coal plants will lose €732 million.
- Germany’s RWE is the utility facing the greatest losses – it could haemorrhage €975 million, 6% of its market capitalisation. EPH, with assets mainly in Germany and the Czech Republic, could lose €613 million, and PPC, in Greece, could lose €596 million.
This year EU hard coal generation has fallen 39% since 2018, resulting in “eye-wateringly low utilisation rates” while lignite generation is down 20%. Carbon Tracker calculates that overall 84% of lignite generation and 76% of hard coal generation is unprofitable, facing 2019 losses of €3.54 billion and €3.03 billion respectively. Across the EU 79% of coal plants are running at a loss.
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About Carbon Tracker
The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality.
Their research to date on the carbon bubble unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future. www.carbontracker.org