Coal Power Plants In Europe Face Losses of €6.6 Billion
Due to the reduced costs of renewable energy and cheap sources of natural gases, coal power plants have seen record losses of up to €6.6 Billion ($7.3 Billion) this year. This has led to nearly 80% of lignite and hard coal-fired generators being unprofitable, according to data from Carbon Tracker Initiative.
Carbon Tracker Initiative is a London based group which is supported by Europe and the US. The group has crunched the numbers on every coal plant in the EU to reveal these statistics.
In nations where there have been increased carbon emission permits introduced, such as Czech Republic, Spain and Germany are where the biggest losses are being faced. This is because it makes it less attractive to burn coal for power compared to its competitors like natural gas and renewable energy sources. Some of these nations now have plans in place to shut down their coal power plants such as Germany who plan to close them by 2038 and Spain by 2030.
The German coal firms are witnessing some of the highest losses, RWE are estimated to have losses of around €975 Million which is equal to about 6% of its market capitalisation.
“The numbers and assumptions do not stand up to the facts. They are wrong and cannot form the basis for a serious assessment,” an RWE spokesman said.
The report also includes that Central European energy group EPH and PPC in Greece could potentially be at losses of €613 million and €596 million respectively.
Not only is it the increased carbon permits which are increasing the losses for the coal industry, but the reduced cost of natural gas. In the Netherlands, standardised gas contracts are selling at 27% below their 10-year seasonal average, making natural gas a much more attractive substitute to use.
Along with the coal permits that the companies have to oblige to, companies have also had to increase spending on expensive technology to reduce their emissions so that they are able to meet the strict EU air quality standards which are set for 2021, the report found.
It is not all doom and gloom for coal power plants, there are some plants which are estimated to make profit over the coming year. The efficient coal plants in Germany and the Netherlands should still turn over profit due to their improved technologies which have lead to them being more efficient. And some of the plants in Poland will be in profit due to the high subsides they receive from the Polish government. This is because Poland is one of the countries that is still very reliant on coal power plants for their electricity. There are also some plants in Slovenia, Czech Republic and Italy that also do not run at a loss due to the increased wholesale power prices in those nations.
Many of the coal plant operators are adamant that coal power will still be around for decades to come as they provide a stable and reliable energy source, unlike renewable energy, however the reduced costs of renewable energy and its improved reliability along with cheaper natural gas prices has created competitive alternatives to the market. The only way that coal plants can be profitable in the future is from large subsidies from the nations governments to keep them going.