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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, 25 May 21
KOREA SOUTHERN POWER INVITED BIDS FOR 870,000 MT OF MIN 5300 NCV COAL FOR 2021 TO 2023.
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for total 870,000 MT of Min 5,300 kcal/kg NCV coal for Augu ...
Tuesday, 25 May 21
CHINA’S COAL OUTPUT RISES IN FIRST FOUR MONTHS - XINHUA
China’s raw coal output rose 11.1 percent year on year to 1.29 billion tonnes in the first four months of 2021, official data showed.
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Tuesday, 25 May 21
MARINE SHIPPERS BULK UP: ANOTHER GAME OF CHICKEN IN THE WORKS? - THE KOREA TIMES
Global shipping companies have been placing orders for large ships, with many anticipating further increased competition within the next three year ...
Friday, 21 May 21
MARKET INSIGHT - INTERMODAL
The dry bulk market’s counter seasonal surge so far into the first half of the year -in a sort of 2010 manner - and Capesize’s recent r ...
Wednesday, 12 May 21
U.S. COAL PRODUCTION TO INCREASE BY 43 MMST IN 2021 TOTAL 582 MILLION SHORT TONS - EIA
U.S. energy Information Administration expects U.S. coal production to total 582 million short tons (MMst) in 2021, 43 MMst (8%) more than in 2020. ...
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- TeaM Sual Corporation - Philippines
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- Edison Trading Spa - Italy
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- PTC India Limited - India
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
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- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
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- Wood Mackenzie - Singapore
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- Jindal Steel & Power Ltd - India
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- PowerSource Philippines DevCo
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- Minerals Council of Australia
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- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
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- GMR Energy Limited - India
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- Merrill Lynch Commodities Europe
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- Independent Power Producers Association of India
- Australian Coal Association
- Australian Commodity Traders Exchange
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- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
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- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Billiton Holdings Pty Ltd - Australia
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- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
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- Orica Mining Services - Indonesia
- Economic Council, Georgia
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- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Georgia Ports Authority, United States
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- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
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- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
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- Parliament of New Zealand
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- Indian Oil Corporation Limited
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- Commonwealth Bank - Australia
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- Bhushan Steel Limited - India
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- Bulk Trading Sa - Switzerland
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- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
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- Electricity Authority, New Zealand
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- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
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- White Energy Company Limited
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
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- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
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