End of an Era: Coal Investment Drying Up

Now a new report by environmental NGOs is out that shows a huge change in the global energy investment profile. Some key conclusions:

"After a decade of unprecedented expansion, the amount of coal power capacity under development worldwide saw a dramatic drop in 2016, mainly due to shifting policies and economic conditions in China and India, according to a survey by CoalSwarm’s Global Coal Plant Tracker. The drop occurred in all stages of coal plant development, including preconstruction planning, construction starts, and in-progress construction. Key developments include: ■ A 48% drop in pre-construction activity, a 62% drop in construction starts, and a 19% drop in ongoing construction. As of January 2017 the amount of coal power capacity in pre-construction planning was 570 gigawatts (GW), compared to 1,090 GW in January 2016. (A typical coal-fired generating unit is 500 MW, or 0.5 GW, in size, with most power stations having two or more such units.) ■ In China and India, 68 GW of construction is now frozen at over 100 project sites." Boom and Bust 2017TRACKING THE GLOBAL COAL PLANT PIPELINE  2017. 

The driving force on this change is the new economics of energy production. 

Add to this picture, the projections on energy storage costs and it is clear that coal power days are numbered.  Industrialized nations typically use about 50-55% of their installed electricity production capacity to mean the average demand load. The balance is only used for peak periods that require more output. While energy demand is stabilizing in most places, peak energy needs are growing, making this dichotomy worse. Energy storage is starting to work both ends of the demand curve, taking power when it is not needed and saving it for use when it is needed. This along with more distributed energy and mini-grids is changing the energy sector as you read this.

Some countries will be winners in these changes and some will be losers. One clear loser at this point is Poland. Due to the political clout of coal miners and the temptations of thousands of patronage jobs in state-owned or controlled energy companies, politicians here have drawn a hard line of resistance to these economic trends. The immediate result is the loss of billions in equity energy investment to make the transition to new energy. Investment in the energy sector is molded by formal and informal forces designed to preserve the role of state-owned and controlled energy companies relying on coal. 

The bitter irony is that this mistake is being done in the name of energy security at the same time that it totally undermines Poland's long-term ability to demand its onw demand for electricity.