Solar and wind make coal unprofitable in Japan

https://www.pv-magazine.com/2019/10/07/solar-and-wind-make-coal-unprofitable-in-japan/

Even in Japan, where the price of solar and wind energy is taking longer to fall than in other mature PV markets, the relentless retreat of renewables costs will undershoot new investment in coal by 2025 at the latest.

That is the main conclusion of the Land of the Rising Sun and Offshore Wind study published by financial thinktank the Carbon Tracker Initiative with the University of Tokyo. The authors of the report claim the Strategic Energy Plan and Long-term Strategy for Decarbonization policies recently approved by the government lay the ground for an increasingly important role for renewables – which could mean grim news for the coal industry.

The report lists 21 new coal power projects with a combined generation capacity of 11 GW which are being planned, developed or built in Japan and warns several may be doomed to close prematurely and become stranded assets if the Japanese government is serious about its new decarbonization targets.

The paper’s authors developed a project finance model for each of the coal facilities which they said demonstrated, across three scenarios of differing lengths of time, how assets may soon become unprofitable and how, in a worst-case scenario for fossil fuel, they could suffer reduced cashflows totaling $71 billion. Some $29 billion of that could be avoided if the Japanese government reconsiders investment for new coal plants, say the authors of the report. The study also highlighted, 42% of the global coal fleet was likely to have become unprofitable in 2018 and that percentage could rise to around 72% in 2040.

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