Global Energy Monitor

Wednesday 23 October, 2019: Despite Southeast Asia being heralded as a major growth region for the coal industry, new data from Global Energy Monitor (GEM) reveals that only Indonesia saw new coal-fired power enter into construction in the first six months of 2019. 

According to GEM, this year is shaping to be the second in a row in which the regional coal pipeline has declined sharply, with 1,500 megawatts (MW) entering construction in the first six months of 2019, following only 2,744 MW entering construction during 2018. As shown in Figure 1, construction starts have fallen dramatically since peaking at 12,920 MW in 2016. 

Figure 1. Coal Plant Construction Starts in Southeast Asia, 2015 to mid-2019 (MW). 

Source: Global Energy Monitor, 2019

According to Ted Nace, Executive Director of GEM, construction starts are a strong indicator of the vitality of the coal pipeline. “New construction is the acid test of whether a proposed project is real or just some plans on paper,” Nace said. “To go into construction you have to get someone to commit hundreds of millions of dollars. In Southeast Asia, it looks like it’s becoming a difficult case to convince people to commit that kind of money.”

Beyond construction, the amount of coal plant capacity in pre-construction stages in Southeast Asia also continues to contract, shrinking 52% from 110,367 MW in mid-2015 to 53,510 MW in mid-2019 (Table 2). With so few projects moving from pre-construction to construction, a continuation of recent trends will mean that most of the remaining 53,510 MW in pre-construction development is more likely to be cancelled rather than implemented.

“Coal power is facing something of a perfect storm,” said Christine Shearer, Director of GEM’s Coal Program. “Communities are rejecting it due to the high levels of pollution, renewable energy technology is undercutting it in terms of quality and cost, and financial institutions are backing away fast, making funding an increasing challenge for coal proponents.”

The figures are important as they signal a new trend emerging in Southeast Asia, which is viewed as a potential major source of growth by the coal industry in export markets such as Australia and Indonesia. According to GEM, Southeast Asia is in fact home to three of the world’s top ten largest coal power pipelines (Table 3). Yet the low rate of new construction and quickly declining pipeline suggests much of this capacity will not be realized.

“The projected expansion of coal-fired power capacity in Southeast Asia is turning out to be more fizz than boom,” said Nace. “The number of plants entering construction during the first six months of 2019 is extremely low, and we see this decline continuing.”

The findings follow a recent report from the Centre for Financial Accountability which showed investments in coal-fired power in India dropped by 90% from 2018 to 2019. India was also expected to be the next major source of growth by the coal industry, but its pre-construction pipeline has declined 80% since 2015, due to public opposition and increasingly low tariffs for solar and wind projects.

A similar trend away from coal and toward renewables appears to be unfolding in Southeast Asia, where some recent major shifts include:

  • Over 110 financial institutions have implemented policies restricting lending to coal power. In 2019, this includes Asian financiers DBS, OCBC, UOB and Mitsubishi UFJ.
  • In January, Thailand released its new power development plan which removed two major coal plants, the 800 MW Krabi and 2,200 MW Thepa. The 3,200 MW Thap Sakae was also shelved due to community resistance. Instead, Thailand is making a major pivot towards clean energy, outlining plans such as 2,700 MW of floating solar to be tendered.
  • Vietnam hit its solar target six years early, while a recent review ofits power plan showed 93% of its Build-Operate-Transfer coal plants are delayed, many severely.
  • In the Philippines, President Duterte surprised many when he called in his State of the Nation Address last month for accelerating renewable energy and reducing coal. “We recognise the urgent need to ensure the sustainability and availability of resources and the development of alternative ones. In this regard, I trust that Secretary (Alfonso) Cusi (Department of Energy) shall fast-track the development of renewable energy sources and reduce dependence on traditional energy sources such as coal,” President Duterte said.

“Traditional coal importing markets such as Thailand and Taiwan have already made a clear pivot away from coal,” said Nace. “While we will no doubt see some new coal plants coming online in countries such as Vietnam and Indonesia, the conclusion is rapidly being drawn that renewable energy is a smarter option to drive their economies.”