Building new onshore wind and solar PV projects will be cheaper than operating existing coal plants in Europe by 2027, according to a report released today by Carbon Tracker.
It reveals that 54% of EU plants are already loss-making, with the number expected to rise to 97% by 2030 as air quality standards and carbon prices push up operating costs.
In addition, it shows that a complete phase-out of coal by 2030 could stem utility losses by €22bn (£19bn), but that energy providers currently only plan to close 27% of capacity by then.
“Air pollution policy, rising carbon prices, and the changing economics of renewables, have put EU coal power in a death spiral,” Carbon Tracker analyst, Matt Gray, said.
The research shows that Germany has the highest number of unprofitable coal plants, but that early closure could save them €12bn, while Poland could make savings of €2.7bn.
It also reveals that closing capacity would cut losses for all of Europe’s 15 largest operators, except Italy’s Enel and Romania’s CE Oltenia, with German utilities RWE and Uniper making savings of €5.3bn and €1.7bn respectively.
Despite this, the report highlights how companies may keep coal plants running in the hope that governments will either continue to subsidise them for the guarantee of power supply, or pay them to close.
It also states that the expectation that competitors will retire plants and push power prices up, could also tempt utilities to keep them running, as could the potential clean-up costs associated with moving away from coal.
However, stricter EU air quality standards that require 70% of capacity to install expensive new technologies by 2021 are expected to focus the minds of utility companies.
In addition, the European Commission has proposed banning coal from receiving capital market payments by 2025, which would likely undermine the chances of plants gaining new support from member states.
“Utilities can’t do much to stop this other than drop coal or lobby governments and hope they will bail them out,” Gray added.