Global demise of coal -fired generation driven by idle and unprofitable plants RSS Feed

Global demise of coal-fired generation driven by idle and unprofitable plants

China grapples with overcapacity by slowing coal plant construction while more U.S. plants have closed during the first three years of the Trump administration than in Obama’s two terms.

The demise of coal is now a global phenomenon that — rather like Covid-19 — is no respecter of borders or governments, with both China and the United States grappling with the social and economic impacts of overcapacity.

In other words, baseload power just isn’t what it used to be, and too many coal plants around the world are sitting idle and unprofitable too much of the time. In China, the issue has surfaced in a recent government policy statement calling for the elimination of outdated coal-fired plants and stricter controls on new capacity.

Meanwhile, in the U.S., President Donald Trump’s efforts to revive the coal industry have not slowed the snowballing pace of plant closures, now running at a higher rate than during the eight years of the Obama administration. According to figures from the Energy Information Administration (EIA), reported in E&E News, 15 GW and 33 GW were retired during Obama’s first and second terms, respectively, versus 37 GW since Trump took office in 2017. Another 3.7 GW of capacity are projected to close in the next six months.

What is significant here is that two so diametrically opposed economies and governments should be, to different degrees, frustrated in their efforts to prop up coal.

While China leads the world in solar capacity, its continuing reliance on coal and on the construction of new coal-fired plants to drive economic growth has also made it the world’s largest emitter of greenhouse gases. Coal accounted for 57.7% of the country’s energy consumption in 2019.

Capacity up, utilization down

But, according to a recent analysis published on the Carbon Brief website, as capacity has increased, utilization has gone down, with many Chinese coal companies running at a loss, and plants typically operating at 50% capacity.

Reflecting a shift in government priorities — from economic growth to “energy security” — the policy statement puts a hold on previously green-lighted projects, limiting new construction to facilities providing emergency back-up and peak power demand, rather than baseload. The actual impact of the statement is uncertain, however, with some China watchers seeing it as part of an internal debate on coal policy as the country prepares its next five-year economic development plan, to be finalized in early in 2021. The need to stimulate the economy as it recovers from the Covid-19 pandemic could be another complicating factor.

Creating a virtuous cycle of change

The story in the U.S. is more familiar and more certain, with the EIA reporting coal-fired generation at its lowest point since 1976, undercut primarily by cheap natural gas and wind. Even with ongoing plant closures, utilization rates also fell to 48%, and for the first time, Americans consumed more renewable power, including hydroelectric, than coal-fired generation.

Read full article at PV Magazine