Developers investing in new coal plants are at risk of losing $638 billion across world markets, according to a new report from Carbon Tracker.
By 2030, investing in new renewable power will be cheaper than maintaining legacy coal plants across all major global markets, the report finds. Currently, 60% of coal generation has a higher long-run marginal cost than renewables' levelized cost of electricity. In total, there are 499 GW of new coal generation planned globally, according to the report.
New renewable power is already cheaper across all major markets than new investments in coal, though previous estimates by Carbon Tracker didn't predict renewables to overtake coal across the board until 2025, suggesting the transition is happening quicker than anticipated.
Global and domestic trends continue to show the costs of wind and solar undercutting coal-fired power, particularly in markets where those technologies have had time to mature.
Companies are increasingly taking signals from this economic reality, as well as social and environmental pressure from shareholders, and moving away from coal-fired power in many Western regions in particular.
Corporate renewables purchases are at an all time high in the U.S. and globally, but the report notes Eastern Asia and other regions are still issuing government-backed power purchase agreements for coal, which could be risky considering a typical capital recovery period of 15 to 20 years.
Regulated and semi-regulated markets face the most extreme risk of stranded costs for coal plants, according to the report, including the U.S., China, India and the European Union. Extreme stranded cost risk is defined by Carbon Tracker as a market where 45% or more of coal capacity is more expensive than renewables today, and where all coal will be more expensive than alternatives by 2030.
"Governments and policymakers and investors should see that, actually, there is no good financial case for coal," Sriya Sundaresan, senior analyst at Carbon Tracker's Power and Utilities group, told Utility Dive.
"You have to phase out high cost projects," she said. "And that is a process that happens over time. It's not like you suddenly shut down every coal plant, but I think there's just a lack of kind of forward thinking about how the energy transition looks."
China has the most new coal-fired generation planned, with over 99 GW under construction and another 176 GW planned, despite renewables being cheaper than new and existing coal.
Meanwhile, Southeast Asian countries have almost 23 GW under construction and another 55 GW planned. India, Turkey, Japan and European Union countries also have several gigawatts of coal planned or under construction.
The United States has no new coal planned, but the Department of Energy is looking into building smaller, more efficient plants, despite these and other economic signals that coal faces an uphill battle.
Market trends find that coal faces "imminent economic obsolescence" in deregulated markets, while some semi-regulated markets like the U.S. could allow those costs to be passed onto customers. Other semi-regulated markets, specifically in eastern Asia, face a policy realm that often subsidizes coal generators, allowing them to sell below market price, which could allow some of those planned buildouts to proceed.
"We see in a lot of markets, especially in Asia, that there's so much new build capacity planned," said Sundaresan. "That's really where policy changes and shifts need to happen to kind of aggressively allow for renewables to be built, but also to kind of phase out coal."
Carbon Tracker's report is based on data tracking approximately 95% of operating, planned or under construction coal-fired generation globally.