Four in five EU coal plants losing money
A whopping 79% of coal power plants in the EU are unprofitable, a new study by Carbon Tracker has uncovered, with the sector facing loses of €6.6bn (£5.7bn) this year alone.
In a report published today, the think tank urges investors and policymakers to prepare for a “complete phase-out” of coal by 2030 amid competition from low-cost wind, solar and gas.
It claims that the coal sector cannot survive without heavy subsidies, and that governments face “intractable problems” if they continue to support the industry in the long term.
By continuing subsidies, leaders will have to choose whether to pass the costs on to utilities and destroy shareholder value, to customers and push bills up, or to fund coal from debt or taxes, according the report.
“EU coal generators are haemorrhaging cash because they cannot compete with cheap renewables and gas, and this will only get worse,” said report co-author, Matt Gray.
“Policymakers and investors should prepare to phase out coal by 2030 at the latest.”
Carbon Tracker used asset-level financial models to analyse the operating economics of every coal plant in the EU and the losses that they could face in 2019.
Hard coal generation has fallen 39% since 2018, resulting in “eye-wateringly low” utilisation rates, according to the report, while lignite generation is down 20%.
The researchers found that Germany’s lignite and hard coal plants could lose €1.9bn in 2019, yet the country’s coal exit commission has only recommended a phase-out by 2038.
Spain and the Czech Republic, which have yet to set phase-out dates, face losses of €992m and €899m respectively, while the UK, which has a 2025 deadline to close its remaining coal plants, is likely to lose €732m.
In total, Carbon Tracker estimates that 76% of hard coal generation, and 84% of lignite generation, is unprofitable, with these facing loses of €3.03bn and €3.54bn respectively.
“Getting off coal is cheap and can be a win-win for consumers and shareholders, providing governments and investors work with local communities," Gray added.
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Chris Seekings is a reporter for TRANSFORM