Aging coal-fired power plants are paving the way for a renewable energy revolution

New research from the Institute for Energy Economics and Financial Analysis (IEEFA) shows that by the end of this decade, more than 800 coal-fired power plants in emerging economies could be profitably replaced by solar energy. This is both a surprising and hopeful finding, as the lack of affordability of such a transition has long been one of the key obstacles standing between the world and limiting global warming by 1.5°C.

Phasing out coal is one of the most important and urgent steps in the fight against climate change. While phasing out coal is widely recognized as an international priority, only a tenth of currently operating coal-fired power plants are expected to close by 2030. This is largely because developing economies often cannot afford such a transition and have other, more urgent political and economic priorities.

Currently, coal accounts for 35% of the world’s energy supply. For many countries, it is a key source of reliable and affordable energy at a time when many emerging economies are trying to expand their networks. Globally, approximately 774 million people still live without electricity, and many developing countries see coal as a key resource to fill this gap. “Without coal as their main energy source, developing countries could find it virtually impossible to improve their quality of life in any significant way,” Politico recently reported.

However, it is developing countries that will also suffer most from climate change. It is a cruel irony – the global South is choking on the fumes of industrialization and the economic enrichment of the North, but does not have the luxury of enriching its own economy in the same way. Instead, these nations will need to leapfrog the typical next stage of increased fossil fuel use and move directly to clean energy innovation. And it won’t be easy.

While the cost-effective conversion of 800 coal-fired power plants to clean energy facilities is an extremely promising step in the right direction, it is just a drop in the bucket compared to the kind of large-scale transformation the developing world needs to stay on any possible path to achieving global goals. atmospheric. “The key problem here is the lack of well-defined, contracted and bankable carbon-to-clean transactions,” said Paul Jacobson, lead author of the IEEFA report.

Most of the 800 power plants identified by IEEFA are over 30 years old and therefore largely debt-free and have years under long and binding power purchase agreements. This, combined with the growing profit differentials for renewable energies, and solar in particular, means they can be decommissioned and reallocated to other energy sources, while still achieving economic benefits.

However, these conditions apply to very few coal-fired power plants in the world. Finding alternative ways to finance the decommissioning and greening of newer coal-fired power plants will be crucial to achieving climate goals without compromising energy security, economic benefits and social development. Richer countries have long promised to help poorer countries finance the clean energy transition, a dynamic known as “climate finance.” However, they never delivered on these promises, leaving emerging economies to look for other options.

What is hugely encouraging is that the profitability of solar power has increased so significantly that it is now worth shutting down some coal-fired power plants just for the sake of profits. But this alone will not be enough to bring about the eventual demise of coal. Coordinated political efforts and a renewed commitment to climate finance will be key to ensuring that decommissioning the first 800 power plants is not just a fluke, but the beginning of a just transition away from coal.

Author: Haley Zaremba for Oilprice.com

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