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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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Wednesday, 13 October 21
MARKET INSIGHT - INTERMODAL
Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to se ...
Wednesday, 13 October 21
FBX INDEX: THE IMPOSSIBILITY OF SHORT-TERM FORECASTING - LARS JENSEN
Will freight rates on Asia-Europe or the Transpacific reach 40.000 USD/FFE in the run-up prior to Chinese New Year 2022? Or will they start droppin ...
Wednesday, 13 October 21
CHINA FLOODS: COAL PRICE HITS FRESH HIGH AS MINES SHUT - BBC
The price of coal used in China’s power plants has surged to a new record high as another of the country’s key mining regions is hit by ...
Tuesday, 12 October 21
BUMA SIGNS CONDITIONAL AGREEMENT FOR AUSTRALIAN ASSET ACQUISITION
PT Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama, through its newly incorporated Australian subsidiary, BUMA International Pty ...
Tuesday, 12 October 21
INDONESIA'S COAL-BASED POWER PLANTS ARE SUBJECT TO CARBON TAX NEXT YEAR, ELECTRICITY COSTS COULD RISE! - CNBC
The Indonesian government is planning plans to implement a carbon tax of IDR 30 per kilogram (kg) of carbon dioxide equivalent (CO2e) or equivalent ...
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- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- The University of Queensland
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
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