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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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Monday, 01 November 21
COAL PRICES HAVE FURTHER ROOM TO DROP: TOP ECONOMIC PLANNER - GLOBAL TIMES
China’s top economic planner said coal prices have further room to drop on Friday, as the most traded coal futures dropped to below 1,000 yua ...
Saturday, 30 October 21
CHINA'S COAL PRICES SEE BIGGEST WEEKLY FALL IN MORE THAN 5 YEARS - REUTERS
China’s coal futures prices saw their biggest fall in more than five years after the powerful state planner said there is still room to adjus ...
Saturday, 30 October 21
G-20 LEADERS PREPARE STATEMENT TO STOP FUNDING FOREIGN COAL PLANTS - BLOOMBERG
Leaders of the Group of 20 wealthy economies are preparing to pledge to stop funding foreign coal-fired plants, but are still wrangling over climat ...
Friday, 29 October 21
APAC THERMAL COAL SUPPLY TO REMAIN TIGHT AS WINTER LOOMS - FITCH RATINGS
APAC thermal coal prices have surged, hitting historically high levels. The benchmark Newcastle 6,000kcal/kg grade coal reached USD228/tonne in mid ...
Thursday, 28 October 21
CANADA BAN ON SHIPPING COAL WOULD EQUAL SCRAPPING AS MANY AS 3 MILLION CARS - IEEFA
Canada ban on shipping coal would equal scrapping as many as 3 million cars
Change in Canadian policy could have major implications ...
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- Sree Jayajothi Cements Limited - India
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- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
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- McConnell Dowell - Australia
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- Directorate General of MIneral and Coal - Indonesia
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- Energy Link Ltd, New Zealand
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- Ministry of Transport, Egypt
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- Antam Resourcindo - Indonesia
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- White Energy Company Limited
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- Central Electricity Authority - India
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- Indonesian Coal Mining Association
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- Mercator Lines Limited - India
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- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Power Finance Corporation Ltd., India
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- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
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- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
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- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
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- Electricity Generating Authority of Thailand
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- LBH Netherlands Bv - Netherlands
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- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
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- Thai Mozambique Logistica
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
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- Ministry of Mines - Canada
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- Energy Development Corp, Philippines
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- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
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- Independent Power Producers Association of India
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- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
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