Report says China may spend $490 billion on unneeded coal plants

• 8 years ago (2016-11-28)
• David Flin

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According to a study from the London-based environmental think tank Carbon Tracker Initiative, China risks spending $490 billion on building more coal power plants than it needs. It said that slower power demand growth and less polluting energy sources are squeezing coal generation out of the power mix. Carbon Tracker Initiative said that as of July, China had 895 GW of operating coal-fired power capacity utilised less than half the time, with another 205 GW under construction.

The study echoes the September findings of the International Energy Agency, which reported that China may be investing too much in coal power, and suggested that generators haven’t yet fully responded to the Chinese Government’s ambition to scale back.

Tian Miao, an analyst with the research company North Square Blue Oak, said: “Stranded coal power would lower returns for investors. The industry is losing money due to falling utilisation rates and relatively higher coal prices.”

Carbon Tracker said that additional coal capacity beyond existing plants is only required by 2020 if power generation growth exceeds 4 per cent per year and coal plants are run at a utilisation rate of 45 per cent or less. It said that even existing capacity may come under financial pressure by 2020 from power market reforms and carbon pricing.