June 14, 2018
Issue 233  |  View Past Issues

Editor's Note

The notion pushed by many that the shift to clean energy would be a slow, decades-long affair is increasingly being challenged by the rapid real-world renewables rollout. In the US, an Arizona water utility has entered into an agreement to replace some of its power sourced from a coal plant with solar power at almost half the cost. Elsewhere in the US a 1000-megawatt (MW) deal has set a new record low price for solar power. In Australia, a mining industry lobby group has brokered a deal to supply some of its members’ industrial operations with solar power at cheaper than grid prices.

With ever-cheaper renewables undermining coal plants, the transition is accelerating. In Colombia, a power company has abandoned its plans for two new units to expand its existing coal plant stating that one of the reasons was the government’s preference for renewables. In Europe, the shift away from coal could well happen far faster than previously envisaged.

Banks that took big bets on new coal plants — such as in China and India — are now being left exposed to potentially huge losses on unneeded plants. In China, researchers estimate there could be as much as 260,000 MW of surplus capacity by 2020. In India, public sector banks, many of which funded highly risky coal plants, are now facing massive losses. In Vietnam, the US embargo on some Russian companies has forced the delay of a major new coal plant.

Bob Burton


European coal power could decline rapidly

Coal power is still running in many European Union nations, but it could be rendered completely uneconomic — and obsolete — as soon as 2030, writes Silvio Marcacci in Forbes.

Top News

Colombian coal plant expansion cancelled: Termotasajero SA, a subsidiary of Colombian investment company Colgener, has informed the Colombian Mining Energy and Planning Unit it has cancelled its proposed 450 MW expansion of the existing Termotasajero power station. The company said it was dropping the new units due to declining interest among banks in funding coal projects, the national government’s preference for renewable energy projects and the risk of new taxes on coal. (Portafolio [Spanish], CoalSwarm)

Vietnamese coal plant delayed by US block on Russian company: PetroVietnam’s proposed 1200 MW Long Phu 1 coal plant has been hit with further delays after the January 2018 decision by the US Treasury to add Power Machine, a major contractor on the plant, to its list of embargoed Russian companies. As a result of the embargo General Electric suspended its contract to supply turbines and generators for the plant and international banks have frozen US$780 million in loans. Faced with further delays to the project, the Vietnamese Government has directed PetroVietnam to develop a plan for the project and update the construction cost which was estimated in 2013 at US$1.39 billion. (Viet.Nam.Net [Google Translate], CoalSwarm)

Protests against Kenyan plant spread: Protests against the proposed 1050 MW Lamu plant have spread to Kenya’s capital Nairobi with a coalition of groups calling for the joint Chinese–Kenyan plant near the Lamu World Heritage site to be dropped. An Oxfam UK study estimated that Kenya’s power demand over the next decade would be best met by investing in geothermal energy rather than a new coal plant. However, that 2017 study failed to consider utility-scale solar plants. (Quartz, Oxfam UK)

Germany announces coal exit commission: Germany has unveiled its 31-member Special Commission on Growth, Structural Economic Change and Employment which has been tasked with setting an end-date for the country’s coal power plants and developing a strategy to ensure a just transition for affected coal power and mining workers. Germany won’t meet its target of a 40 per cent greenhouse gas emissions cut by 2020 and a 55 per cent reduction by 2030 without coal plant closures. (Clean Energy Wire, Bloomberg, E3G)

Indian state hands Adani US$1.1 billion windfall: Adani Power’s proposed 1600 MW Godda plant in Jharkhand was agreed to in 2014 on condition the company would sell one-quarter of the power to the state. Twelve per cent of the power from the plant was to be sold at the variable cost of production — mostly the cost of coal — with the other 13 per cent at the cost of both the fuel and building and operating the plant. However, two years later Adani Power negotiated to be paid a higher tariff. A leaked government audit report suggests the new tariff could cost an extra 74 billion rupees (US$1.1 billion) over 25 years. The audit states the amended agreement amounts to “preferential treatment” for Adani Power and results in “undue benefits” accruing to the company. (Scroll)

US regulator rejects need for Trump’s coal bailout plan: At a hearing of the US Senate Energy and Natural Resources Committee none of the five commissioners of the Federal Energy Regulatory Commission supported the suggestion that there is a national security emergency in the wholesale power markets requiring federal intervention. The Trump Administration’s aim of bailing out struggling coal and nuclear plants has been opposed by a broad coalition of the oil and gas industry, clean energy advocates, some utilities and market regulators. (Inside Climate News)


Australia: Adani aims to bypass environmental assessment of water pipeline and 450 per cent increase in storage dam.

Botswana: Government drops plan to sell the unreliable 600 MW Morupule plant to China National Electric Equipment Corporation, which built it.

India: Delhi High Court rejects Reliance Power’s plan to increase coal production for 3960 MW Sasan plant.

Myanmar: National government approves restart of mines in Shanh State despite community opposition over pollution.

US: Democratic Party bans donations from coal and fossil fuel companies.

Companies + Markets

US solar prices undermining coal: The Central Arizona Project (CAP), a US water utility, has entered into a power purchase agreement to supply 15 per cent of its power needs from a solar project at almost half the cost of the Navajo Generating Station (NGS). Peabody Energy has been campaigning to prevent the 2019 shutdown of the NGS plant by requiring the CAP to buy more expensive power from the expensive coal plant. Elsewhere, Nevada Power, a utility owned by Warren Buffett’s Berkshire Hathaway, has entered into power purchase agreements to sell power from 1001 MW of new capacity at a record low solar price of $US21.55 per megawatt hour. (GreentechMedia, RenewEconomy)

Ballooning Chinese coal plant overcapacity: Researchers at North China Electric Power University in Beijing estimate China’s decision in 2014 to delegate decisions on power plant construction to the local government resulted in coal plant overcapacity of between 140,000 and 160,000 MW in 2015. They estimate there could be about 210,000 MW surplus capacity by 2020 or, in its worst-case scenario, between 240,000 and 260,000 MW unneeded capacity. (Resources, Conservation and Recycling)

India’s banks’ bad debts pile up: The value of non-performing assets underwritten by India’s banks has grown by 44 per cent over the year to the end of March and now stands at 10.25 trillion rupees (US$152 billion). Just under 90 per cent of the non-performing loans are held by public sector banks. One of the sources of financial stress for India’s public banks has been lending for power projects. Also looming over the private power generators — mostly companies with stressed coal plants — is a directive from the Reserve Bank of India that after October 1, 2018 companies in default on loan repayments to banks will be required to commence bankruptcy proceedings. (Livemint, The Wire)

India and Indonesia canvass coal mining plan for Papua province: A plan by Indian government officials to finance coal exploration in Papua province has stalled over their insistence that they gain exclusive access to any deposits without a competitive bidding process. Representatives of Indonesia’s state-owned energy company Pertamina and the power utility PLN, as well as the private mining company PT Adaro Energy, were also involved in the talks. While Indonesia suggested it would be more appropriate to work with publicly owned utilities due to restrictions on awarding concessions to private companies, other possibilities are still under consideration. (Mongabay)

Uncertainty about Chinese purchases of US coal: Chinese media reports suggest domestic steelmakers may be directed to purchase more US coal to reduce its trade surplus and ease tensions with the Trump Administration. While some suggest that the directive would probably apply to metallurgical coal shipments rather than high-sulphur thermal coal, the cost of US coal remains a disincentive for importers. Anonymous traders have mooted that US coal imports may require a waiver from the 6 per cent import tax to make them more competitive against exports from Mongolia, Russia and Canada. Shipments from Australia and Indonesia are exempt from the import duty under the provisions of free trade agreements. (Platts, Platts)

Sri Lankan Government seeks to revisit coal-free power plan: Sri Lanka’s Prime Minister, Ranil Wickremesinghe, has appointed a six-person committee to re-evaluate the coal-free long-term generation expansion plan approved by the independent Public Utilities Commission of Sri Lanka (PUCSL) in late 2017. In its initial draft power plan for 2018–2037 the Ceylon Electricity Board (CEB) had proposed that PUCSL approve seven new coal units with a total capacity of 3000 MW. However, PUCSL determined the CEB had dramatically underestimated future coal costs to skew the least-cost supply options in favour of coal power. Subsequently, the CEB and the union representing its engineers have been pushing to overturn the PUCSL plan. The committee will report to Wickremesinghe by the end of June. (Newsfirst, Sunday Times)

Solar deal with Australian mining company further isolates coal lobby: A corporate bulk-buying power consortium initiated by the South Australian Chamber of Mines and Energy (SACOME) has entered into an eight-year power purchase agreement with a renewable energy developer. The consortium was established after the closure of the coal-fired Northern Power Station. Five companies, including two mining companies, have signed up for power likely to be sourced from a new 220 MW solar farm. SACOME is an associate member of the Minerals Council of Australia, which is campaigning against renewable energy and in favour of subsidising new coal plants. (RenewEconomy, South Australian Chamber of Mines)


Decision Time at Poland’s PGE: Why a High-Risk, Fossil-Heavy Strategy Doesn’t Add Up, Institute for Energy Economics and Financial Analysis, June 2015. (Pdf) (Summary here.)

This 30-page report details how the Polish power utility PGE, which generates 90 per cent of its electricity from coal and lignite, is very exposed to new European Union air-emissions standards.