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Saturday, 10 July 21
OVERESTIMATED LCOES OF COAL-FIRED POWER PLANTS CREATE A FINANCIAL BUBBLE - IEEFA
 Massive stranded asset risk detrimentally affects the financial and power distribution
India’s future coal-fired power project pipeline carries a massive stranded asset risk due to the collapse in the average utilisation rate of its coal-fired power fleet leading to an underestimation of financial risk for new projects, finds a new report from the Institute for Energy Economics and Financial Analysis (IEEFA).
There are currently 33 gigawatts (GW) of coal-fired power plants under construction and another 29GW of proposed projects under various stages of regulatory approval in India.
Author of the report, energy finance analyst Kashish Shah says the LCOE (levelised cost of energy) is the required tariff at which the net present value of the investment is zero.
“In other words, LCOE is the minimum required average tariff for a power asset to reach a breakeven return at the end of its life. Anything less than that suggests the asset is unviable.”
Shah found that the average utilisation rate of India’s coal-fired fleet has collapsed to a financially unsustainable low of 53% in financial year (FY) 2020/21 from a high of 78% a decade ago in FY2011/12.
For most coal plants in India, the LCOE is calculated with an assumption of utilisation factor of 85-90% throughout the life of the project. However, the LCOE turns out to be 64% higher with India’s average capacity utilisation factor sitting at ~55% for the last few years.
“The aspiration for further builds of coal capacity stems from the notion that coal is still ‘cheap’,” says Shah. “However, with tariffs now below Rs2/kilowatt hour (kWh) (US$27/MWh), solar power is cheaper than even the variable cost of coal-fired power and is ready to absorb incremental daytime demand.”
IEEFA’s report highlights that utilisation factors of coal-fired power plants have declined not just in India, but across major electricity markets including China, the United Kingdom (UK) and the United States (U.S.).
“With zero fuel costs, the marginal cost of generation for renewables is practically zero,” says Shah. “On the other hand, with increasing inflation in Indian domestic coal prices and railway transportation costs for coal, the gap between cost competitiveness of renewables versus coal is widening.
“This raises a serious concern about the viability of coal-fired power plants.
“Debt servicing for underutilised coal-fired power assets becomes extremely difficult and creates a liquidity crunch in the whole value chain. The financial stress then spills over to the power distribution sector as well as affecting India’s financial lending institutions. This further inhibits growth in other important segments of the power industry such as renewables and transmission infrastructure, which are extremely critical for India’s electricity sector transition.”
The report concludes that the financial viability of India’s proposed and under construction coal-fired power projects should be re-evaluated based on the right estimation of utilisation factors including LCOE and capacity factor to avoid further bloating of India’s non-performing assets.
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Tuesday, 01 June 21
BUMA PRODUCED 11.4 MILLION TONNES OF COAL IN 4Q 2020, 5% LOWER COMPARED TO 12.2 MILLION TONNES IN 4Q 2019
PT Delta Dunia Makmur Tbk. presents its newsletter with consolidated financial and operating results that include its primary and wholly-owne ...
Sunday, 30 May 21
PAKISTAN IS PLANNING TO END COAL IMPORTS, WORSENING OUTLOOK FOR SOUTH AFRICAN COAL - IEEFA
The growing and irreversible risks being faced by South African coal exporters
As Thungela Resources’ CEO attempts to talk up ...
Sunday, 30 May 21
G7 COAL FINANCE EXIT AND WHY IT MATTERS FOR INDIA - IEEFA
While India doesn’t rely on export credit finance to fund new coal plants, there are material implications
The commitment by the Group o ...
Saturday, 29 May 21
SKULD’S IMO 2020 SULPHUR CAP EXPERIENCE
More than a year has passed since the International Maritime Organization (IMO) mandate for the 0.50% sulphur cap for marine fuel (MARPOL Annex VI) ...
Thursday, 27 May 21
KOMIPO INVITED BIDS FOR 1.56 MILLION TONS OF BITUMINOUS COAL
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
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- Cement Manufacturers Association - India
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- Australian Commodity Traders Exchange
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- Chamber of Mines of South Africa
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- Anglo American - United Kingdom
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- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
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- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
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- Indonesian Coal Mining Association
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- The Treasury - Australian Government
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- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
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- Thai Mozambique Logistica
- Australian Coal Association
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- Parliament of New Zealand
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- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
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- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
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- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
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- Planning Commission, India
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- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
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- Edison Trading Spa - Italy
- Marubeni Corporation - India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
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- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Trasteel International SA, Italy
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- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
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- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
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- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
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- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
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- TNB Fuel Sdn Bhd - Malaysia
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- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
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- The University of Queensland
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