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Power Businesses The Almighty Buck

Nearly Half of Global Coal Plants Will Be Unprofitable This Year, Report Says (reuters.com) 141

An anonymous reader quotes a report from Reuters: China and other countries could be planning to build more coal plants to stimulate their economies in the wake of the novel coronavirus pandemic but nearly half of global coal plants will run at a loss this year, research showed on Wednesday. China has over 1,000 gigawatts (GW) of coal-fired power, accounting for about 60% of the country's total installed generation capacity and around 100 GW under construction. London-based environmental think tank Carbon Tracker analyzed the profitability of 95% of coal plants in operation or planned around the world.

It looked at 6,696 operational plants and 1,046 in the pipeline and found that 46% will be unprofitable this year, up from 41% in 2019, based on estimated revenues from wholesale power markets, ancillary and balancing services and capital markets, as well as running costs, carbon pricing and pollution policies. That will rise to 52% by 2030 as renewables and cheaper gas outcompete coal, the think tank said. Nearly 60% of China's existing coal plant fleet is running at an underlying loss, it said. China has 99.7 GW of coal under construction and another 106.1 GW in various stages of the planning process but 61% of that would enter the market with negative cashflow, it added. Governments and investors building new coal may never recoup their investment because coal plants typically take 15 to 20 years to cover their costs, the report said.

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Nearly Half of Global Coal Plants Will Be Unprofitable This Year, Report Says

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  • Half? (Score:4, Insightful)

    by nospam007 ( 722110 ) * on Thursday April 09, 2020 @08:01AM (#59924772)

    A good beginning.

    • Re:Half? (Score:4, Insightful)

      by DrSkwid ( 118965 ) on Thursday April 09, 2020 @08:25AM (#59924816) Journal

      How do you propose to make 2bn tonnes of steel per annum without coal?

      • Re: (Score:3, Interesting)

        by XXongo ( 3986865 )

        How do you propose to make 2bn tonnes of steel per annum without coal?

        A large fraction of steel production these days turns out to be from recycling scrap, actually.

        In any case, the current discussion is about power plants, not steel production.

      • How do you propose to make 2bn tonnes of steel per annum without coal?

        The article is about power stations, not coal mines.

      • Re:Half? (Score:5, Interesting)

        by Strider- ( 39683 ) on Thursday April 09, 2020 @09:42AM (#59925090)

        How do you propose to make 2bn tonnes of steel per annum without coal?

        It's actually now cheaper and easier to smelt iron, and produce steel, using Natural Gas rather than coking coal. The gas contains dramatically fewer impurities, can be controlled more easily, is cheaper, and more efficient.

      • Electric induction?
        Where do you get Electricity from then?
        Natural Gas, HydroElectric, Solar, Wind, Nuclear... Nearly anything that can cause movement, or have a chemical reaction that creates electricity.

      • How do you propose to make 2bn tonnes of steel per annum without coal?

        Well we can start by setting less of it on fire to make power.

        But seriously you think the same coal goes through a power plant (or even into a powerplant) as it does in a steel mill? You've got some reading up to do.

    • 1,000 gigawatts (GW)

      Isn't there an ISO unit for 1000 of something?

    • It's also utter bullshit; coal is sadly about to become obscenely cheap if it isn't already.
  • by magzteel ( 5013587 ) on Thursday April 09, 2020 @08:08AM (#59924792)

    Oh, it was "London-based environmental think tank Carbon Tracker".
    No political agenda there

    • by ljw1004 ( 764174 ) on Thursday April 09, 2020 @08:32AM (#59924828)

      Oh, it was "London-based environmental think tank Carbon Tracker". No political agenda there

      Do you have anything to contribute about flaws in the methodology, or assumptions?

      • Re: (Score:2, Informative)

        The correct assumption is that any "Think Tank" has a political agenda. Who is funding these "Think Tanks"? They aren't doing it for free. Don't be naive.

        • by ljw1004 ( 764174 )

          The correct assumption is that any "Think Tank" has a political agenda. Who is funding these "Think Tanks"? They aren't doing it for free. Don't be naive.

          If the political agenda leads them to a faulty analysis then we can examine the analysis and see where it's wrong. If the analysis is correct despite their agenda, then we have to accept what they're saying even though we don't like it. This isn't called "being naive". It's called "reality doesn't care about your personal biases".

          There's an old saying "heed not the words of demons, even though they speaketh the truth" -- the idea that evil ones will use truth only as a weapon, only when doing so will cause

          • You can't examine the analysis because you can't trust their data. Do you seriously think they have access to the balance sheets of Chinese owned coal plants? God, critical thinking skills. If you want to run your own analysis, go ahead. Good luck. Maybe give China a call and they will send you the accounting data.

            • by ljw1004 ( 764174 )

              You can't examine the analysis because you can't trust their data. Do you seriously think they have access to the balance sheets of Chinese owned coal plants? God, critical thinking skills.

              I'm not sure which part of "critical thinking skills" involving concluding that an analysis is flawed that you haven't read? You're making a handwavey argument that the analysis must necessarily be flawed, without knowing the nature of the argument nor how they derived their numbers. You're not aware of whether they took your concern into account nor how they addressed it.

              Maybe you're using the same kind of critical thinking skills as armchair experts who say of a scientific study "oh it's dumb because they

            • You can't examine the analysis because you can't trust their data. Do you seriously think they have access to the balance sheets of Chinese owned coal plants? God, critical thinking skills. If you want to run your own analysis, go ahead. Good luck. Maybe give China a call and they will send you the accounting data.

              Do you think coal plants are some kind of magic?
              Anyone with half your critical thinking skill can figure out how much coal they use, and how much coal costs to buy. It's not rocket surgery.

        • by AleRunner ( 4556245 ) on Thursday April 09, 2020 @08:46AM (#59924864)

          The correct assumption is that any "Think Tank" has a political agenda. Who is funding these "Think Tanks"? They aren't doing it for free. Don't be naive.

          Everybody has a political agenda, if only something as simple as wanting safe food for their own family (yes, food access is political). The only question is, a) are they open about it or are they dissembling b) do they have a general commitment to telling the truth. The fact that you can immediately link this to an environmental charity shows that, unlike much of the fossil fuel lobby which works through astroturfing and front organisations, they pass the first test which is a good sign. Now, the question, as raised by ljw1004, is "do you have any evidence they are lying".

          • Re: (Score:2, Insightful)

            "The fact that you can immediately link this to an environmental charity shows that, unlike much of the fossil fuel lobby which works through astroturfing and front organisations, they pass the first test which is a good sign"
             
            What? You can't possibly be that naive. Well actually you can, because you are on Slashdot.

            • I'm not that naive. I do see what you are doing.
          • That's a philosophical question.

            If you want a scientific question, ask, "Is their work reproducible?"
            • That's a philosophical question. If you want a scientific question, ask, "Is their work reproducible?"

              It's a good question but I don't really yet want the answer. Their work might be reproducible but misleading. Before I get to your question I'd like to have some idea about whether it's worth putting in the effort to check.

        • Political agenda or not, either coal is quickly becoming unprofitable or it isn't. If it's true, all the positive or negative vibes about coal are moot. Businesses don't like to lose money. If it isn't true and those plants are profitable, then they will keep doing what they are doing. The people who are actually spending money and building/running these plants don't care about how people think. They want to know if they are going to make or lose money.

          And guess what? Often those people spending money are t

          • by ceoyoyo ( 59147 )

            Building a powerplant isn't exactly a stealth operation. It's pretty easy to look at what kinds are being built. It's also not terribly difficult to look at the public operating budgets of any desired type of powerplant and extrapolate.

            The vitriol on Slashdot is silly. it's certainly not going to sway the decisions of anyone building a powerplant.

        • Who is funding these "Think Tanks"? They aren't doing it for free. Don't be naive.

          People on the right are always obsessed with "who is funding them!!!"

          What does it matter? Analyze what they are saying, and critique *that*. I don't need to know who is funding neo-Nazi groups in order to analyze their message.

          The most recent example is Greta Thunberg. "Conservatives" are losing it over who her funders are. Who cares? Look at her message. If she is factually wrong, state that.

          When I listen to Seb G

        • No the correct procedure is never to trust the conclusions fully without analyzing the data first. Have you examined the data and determined any flaws? Dismissing it without even looking at the data seems like a bias to me.
        • The correct assumption is that any "Think Tank" has a political agenda.

          I assume by that you mean that everything with a political agenda has flaws in the methodology or assumptions. So go ahead, start pointing them out. Or are you just making pointless assumptions while contributing nothing to the debate?

      • by magzteel ( 5013587 ) on Thursday April 09, 2020 @09:26AM (#59925010)

        Oh, it was "London-based environmental think tank Carbon Tracker". No political agenda there

        Do you have anything to contribute about flaws in the methodology, or assumptions?

        You're right, I didn't read the report. But I did read the "about" on their web site. Their mission is carbon reduction, and their approach is to convince investors it is uneconomical.

        Our mission
        We recognise that there is a limited global ‘carbon budget’ of cumulative emissions that must be respected to avoid overshooting 2C and destabilising the global climate. Our view is that capital markets are failing to align the capital allocation process, exposing the owners of fossil fuel companies – their shareholders – to potential lost value, as has already been witnessed in the EU utilities and US coal mining sectors. We further believe that companies have not sufficiently factored in the possibility that future demand could be significantly reduced by technological advances and changing policy.

        Our role is to help markets understand and quantify these implied risks.

        Emissions of greenhouse gases will need to fall severely if we are to avoid catastrophic levels of warming. Such constraints will have profound effects on the supply of and demand for fossil fuels, which account for the largest human source of greenhouse emissions.

        We carry out scenario analysis to examine and understand how potential changes to supply and demand will impact the future of fossil fuel-exposed companies and projects. This analysis helps the investment community better understand the financial implications of tackling climate change;

        Our analytical research identifies the highest cost, riskiest investments enabling greater scrutiny by analysts, asset owners, investors, policy makers and financial regulators.
        Our regulatory research builds the case for reform of the financial regulatory system in order to improve transparency of climate-related financial risks and articulates the key changes to be made.
        We provide expert insight for those engaging with energy companies around future strategy and capital expenditure.
        Our research is grounded in conventional financial analysis, and focuses on forward-looking material issues. As a not-for-profit research house we are free from the constraints that would be imposed by a commercial financial research business model. This allows us to challenge business-as-usual approaches that we consider to be unsustainable in the face of the unprecedented challenge posed by climate change.

        • by AmiMoJo ( 196126 )

          So it's ad-hominem attack on them but you don't actually have any criticism of their report?

          Sounds like an admission that they are right and all you could do is fall back on the ad-hominem logical fallacy in the hope that people would fall for it.

          • by Zak3056 ( 69287 )

            It's definitely an ad hominem, and the criticism on his part is invalid from that point of view (just because someone is biased does not invalidate their research).

            That said, I have not found the report to read, but the link in the summary states:

            In 2019, 41% of the existing global coal fleet could have been cashflow negative (i.e. the operating costs are greater than revenues received) based our modelling methodology, despite an 8% year-on-year decline in fuel prices.

            In 2020 we expect 46% of the fleet to be cashflow negative based our modelling methodology. We expect the impact of COVID-19 on coal power economics to be limited due to already suppressed coal prices and the insignificance of carbon pricing globally.

            They do not disclose their model, and they have not validated it against 2019 results (note, they say "could have been cashflow negative" and not "were." They don't know. Also, we all know "cashflow" and "profitability" are not the same thing. You can be profita

            • by radl33t ( 900691 )
              Also, for those of us in the field, we can recognize these claims are consistent with 1) lots of recent published analyses, 2) good data on the spot price of coal, plant-specific production costs, real time marginal pricing, economic dispatch patterns, the balance sheet of publicly traded utilities and coal producers, 3) regulatory data submitted to the IEA by power plants in the US (EIA-861), 4) the economic decisions of US utilities over the past several years, 5) approved resource plans of utilities over
          • by lgw ( 121541 )

            The correct default assumption for any study with political consequences is "propaganda". Really, everything these days should be assumed to be propaganda until proven otherwise.

            • by AmiMoJo ( 196126 )

              You can find a political bias for anyone and any organisation. Just try to name one that is unimpeachable.

              Thus all information will be ignored unless you choose to also ignore those biases, which you will do selectively to build your own preferred version of the truth.

              • by lgw ( 121541 )

                Trust only those who "bend over backwards to prove themselves wrong", to quote Feynman. This is of course the line between good science and bad.

                But in the broader world, assuming everyone you hear from is a conman is a good approach. This goes double for investing!

        • by ljw1004 ( 764174 )

          You're right, I didn't read the report. But I did read the "about" on their web site.

          How would you distinguish between an agenda-driven organization that pushes an agenda because it had done good data-analysis and found an important message worth sharing, from one that's pushing an agenda for self-interest and then distorts the data to further that agenda?

          The way I do it is by reading what they have to say. I have a critical mind and the kind of logical sleights used by the latter are always easy to spot and are often informative. I think it's wrong (contributes to polarization, and misses

          • by radl33t ( 900691 )
            Yep. It also helps that much of this data is public, at least in US and EU. And that the conclusions are consistent with economic choices that have been made or are in the planning stages by the owners and operators of these plants.
        • by Ed Tice ( 3732157 ) on Thursday April 09, 2020 @11:44AM (#59925446)
          If their goal is to convince investors (a group that generally has considerable resources available), they are going to have to be very credible. The fact that they disclose this actually works to improve their credibility. Now they may be wrong and they may have pushed boundaries too far to be successful. But if I had the stated goal of convincing a skeptical audience, I sure would want to be extra careful about my statements rather than playing fast and loose.
      • Well, it looks like they only looked at coal. I think it is safe to say that a lot of power generation facilities, especially newer ones that are not paid for yet, are going to see profits drop rapidly this year, what with a global pandemic killing off business and industry big time.

        2020 is probably not going to be the most opportune year to bring any new electrical generation capacity online, and it's going to be a tough year for the ones already running.

        • by ljw1004 ( 764174 )

          Well, it looks like they only looked at coal. I think it is safe to say that a lot of power generation facilities, especially newer ones that are not paid for yet, are going to see profits drop rapidly this year, what with a global pandemic killing off business and industry big time. 2020 is probably not going to be the most opportune year to bring any new electrical generation capacity online, and it's going to be a tough year for the ones already running.

          I wonder how much of a plant's operating cost is fuel, how much is rent/maintenance, and how much is debt? I wonder how different the ratios are for coal vs nuclear vs wind vs solar?

      • Do you have anything to contribute about flaws in the methodology, or assumptions?

        What does it mean that the coal power plants run at a loss? Does this mean that they will be shuttered? That there won't be more of them built?

        Lots of large companies will run some segment of their business at a loss because it means the total is profitable. When it comes to electrical utilities providing power they don't much care if a given power plant is running at a loss so long as the fleet of their power plants make a profit. Wind and solar power is inherently unreliable, because the wind and sun

        • by ljw1004 ( 764174 )

          What does it mean that the coal power plants run at a loss? ... [reliability, base-load, fluctuations]

          Thank you. That was a clear explanation, and a good way to understand the situation.

    • by AmiMoJo ( 196126 )

      Are they wrong though?

      It's not a secret that coal has been struggling to make a profit in many places as alternatives like gas and renewables produce cheaper energy, and environmental standards and carbon pricing push their costs up.

    • In 2020 All facts seem to have a political agenda.

      Even established facts created hundreds or thousands of years ago. Seem to be part of the modern political agenda conspericy.

    • Your post has a political agenda. I guess no one should pay attention to you.

  • "London-based environmental think tank Carbon Tracker"
     
    "Think Tanks" are just lobbyists who are paid to generate reports to support some policy that someone wants to enact. How would a bunch of people in London know what the operating costs are for Chinese plants? They don't know. Do you think the Chinese are handing over their balance sheets? They are just putting out numbers. Stop pushing lobbyist propaganda.

    • Re: (Score:1, Informative)

      Comment removed based on user account deletion
      • You can believe words mean whatever you want, I guess - but propaganda, definition below from https://www.merriam-webster.co... [merriam-webster.com] - is only information to promote your viewpoint / ideology. It can be true or not true. In fact obviously it's better if it IS true. You can still use it for propaganda. It's basically synonymous with marketing.

        propaganda noun
        Save Word

        To save this word, you'll need to log in.
        Log In
        propaganda | \ prä-p-gan-d
        , pr- \
        Definition of propaganda

        1 capitalized : a congregation of th

      • by lgw ( 121541 )

        Basically propaganda is generally disprovable.

        That's a particularly bad definition of propaganda, and one the propagandists greatly benefit from. Deceiving people using a collection of true statements works much better. Heck, once you start using statistics, it's not even difficult.

      • The best propaganda is 100% true yet still misleading. I heard you beat your wife last night. That is 100% true.
        • by dfghjk ( 711126 )

          It is "100%" unverifiable. It is highly unlikely to be true.

          • It is "100%" unverifiable. It is highly unlikely to be true.

            What's there to verify? Did he hear someone tell him that you beat your wife? Let's verify that by asking him what he heard.

            Yep, it looks like he heard you beat your wife. I verified it. 100% verified. He heard you beat your wife. All true. All verified. But also misleading.

    • In the United States think tanks are just lobbyists who are paid to generate reports to support some policy that someone wants to enact.

      Fixed that for you.

      Just a polite note: Many other countries aren't quite as venal and corrupt as the United States.

      • From my perspective here in the UK, we are not *as* corrupt as the Us, but we're still pretty corrupt.

      • Just a polite note: Many other countries aren't quite as venal and corrupt as the United States.

        Correct. Often, they're worse. Some marginally, others grossly.

        • Most, however, aren't nearly as bad. And it's not as though this isn't known. In Canada, for example, the term "Yankee Trader" usually means a con man, cheat or drug smuggler.

    • How would a bunch of people in London know what the operating costs are for Chinese plants? They don't know. Do you think the Chinese are handing over their balance sheets?

      Erm this isn't rocket surgery, you can quite easily estimate operating costs of facilities around the world. A large part of their inputs and outputs are openly traded, and the rest is aggregate statistics.

      That *you* don't know this says only something about you. But then we knew all we need to know already when you do nothing but ad hominem attacks rather than actually argue against the the point or report they made.

    • there was work done to get federal subsidies for coal plants here in the states because they're not profitable but they are a desirable constituency because of how our politics work (there are a lot of high visibility coal miners in our "swing" states, e.g. the states that decide the presidential election because they can go to either political party).

      China might be different because of their disregard for the safety of their people, but here in North America coal isn't profitable. Natural Gas kills it
    • by dfghjk ( 711126 )

      As opposed to what you push?

      I do not think for a moment that "balance sheets" were used for analysis, and I can confidently say that "you don't know" whether they know or not.

      • by radl33t ( 900691 )
        Doesn't really matter, the results are consistent with balance sheet analysis on lots of individual plants and coal heavy utilities. Which is probably why over the past decade coal power has declined by 40% and will get cut by 75%+ over the next decade at which point it will be a marginal resource and less important than natural gas, wind, solar, nuclear energy, and hydro energy.
  • I know of a local coal fired power plant that generates power for 4cents per kwh USD but it's close to a lot of coal. Gas is 5 to 8 cents in many places. Although I do know of a solar installation in india that is selling power for 4cents that just started... but I don't know about their financing and it doesn't supply a base load. Either way, gas and solar comboed are the way to go,the market will take care of itself. China needs to import gas and they have coal, so they will burn what they have.

    • I think they import a load of coal from Australia
      • by ceoyoyo ( 59147 )

        China is one of the biggest coal importers in the world. You're right, much of it from Australia.

      • I think they import a load of coal from Australia

        I recall China imports a lot of uranium from Australia too.

        Australia mines something like 1/8th of the uranium in the world but they have no nuclear power plants of their own. Australia sells uranium to China, Japan, South Korea, and anyone else that wants to buy.

    • by Ogive17 ( 691899 )
      Ahh.. because you have one localized example of it not being true, then it must be false all around the world.

      We must be experiencing a global cooldown because it only hit 45F at my house today. Average high this time of year is 55F.
  • Given that they are more expensive [openei.org] and only "win" because of subsidies. What's steamrolling them all is the increased amount of natural gas use.
    • by wes33 ( 698200 )

      but the openei data you link to ends 6 years ago, and shows a clear
      trend towards solar and wind beating even gas. It would be good
      to see the data up to 2019 ...

      • by ceoyoyo ( 59147 )

        The US Energy Information Administration things solar looks pretty good, even without subsidies.

        https://www.eia.gov/outlooks/a... [eia.gov]

        • The US Energy Information Administration things solar looks pretty good, even without subsidies.

          Make note that not all solar is equal. There's several sources on Wikipedia, including the US EIA, that show rooftop PV and solar thermal are far more expensive than other low CO2 energy sources like onshore wind, geothermal, hydro, and nuclear. Where solar power is cheap is when it's close to the ground and at utility scales, not on top of buildings and above parking lots. This means solar power is competing with other uses for sunlit land, such as crops and wildlife.
          https://en.wikipedia.org/wiki/... [wikipedia.org]

          Roo

    • One factor is solar. But you seem to forget other renewables like wind exist. Also subsidies are not in every area that solar is being used. But to address your second point, yes, one major reason that coal is unprofitable these days is the fact that other fossil fuels are cheaper. But that’s just one reason not all of the reasons.
  • Power is a public utility / infrastructure item. They aren't supposed to be profit centers.

    • ooo.... thats socialism (or communism as some USA posters say as they don't know the difference).
    • False. Power production is a private enterprise in most of the world and absolutely a profit centre. Very few countries have powerplants that are owned and operated wholly by the government, which is a large part of why members of the public get a power bill.

      Also you should google the term public utility. You may realise that private for profit enterprises are still public utilities because that term means something different than you think it does.

    • It used to be that way in most of Europe, but it was privitized 20+ years ago in almost all of them (I think it was EU demanded).

  • 46% will be unprofitable this year, up from 41% in 2019, based on estimated revenues from wholesale power markets, ancillary and balancing services and capital markets, as well as running costs, carbon pricing and pollution policies.

    That 'carbon pricing and pollution policies' cost are basically saying "We don't like coal. So we'll add some numbers to make it look bad." I don't see anything for operating costs. Primarily the spinning reserve allowances that all 'traditional' power wholesalers are required to provide, but wind and solar seem to have conveniently sidestepped. Alternative energy schemes treat this as an externality for which they have no responsibility. Even to the point that their providers complain when a utility provid

  • Hopefully, Trump/GOP will NOT do a China trick and heavily subsidize our coal companies. This would be a losing proposition for all.

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