Many coal power plants unprofitable

The surge in coal prices in the past three years and muted power prices are cutting into the profitability of power stations that burn the fuel, a prominent forecaster said.

About 42 percent of the world’s coal generation capacity is losing money, according to Carbon Tracker, an energy researcher that advocates for climate protection. That proportion will rise to 56 percent by 2030, said Matthew Gray, a senior utilities and power analyst at the consultant.

While coal prices are forecast to fall 13 percent by the end of the next decade, the cost of emitting carbon dioxide is set to double in Europe and is forecast to jump in China, which is introducing an emissions trading market. Those factors mean the cost of running coal plants will exceed what they can earn, the researcher said.

“Depressed wholesale electricity prices are a problem for the entire conventional power industry — nuclear, hydro, coal, gas, but not subsidized renewables, which are of course the reason for the low wholesale prices — their income coming from outside the market,” said Brian Ricketts, secretary general of industry body Eura coal. That, he said, is why support measures for fossil-fuel plants are spreading to help ensure those generators don’t shut too quickly.

Other big causes of the losses at coal plants are rules designed to limit air pollution as well as competition from wind and solar generation. Carbon Tracker’s analysis assumes existing rules stay constant. It doesn’t assume a big increase in other climate measures.