The Fate of European Coal-Fired Power Stations Planned in the Mid-2000s: Insights for Policymakers, Companies, and Investors Considering New Coal

Sustainable Finance Programme – Working Paper – August 2017

86 Pages Posted: 17 Aug 2017

See all articles by Ben Caldecott

Ben Caldecott

University of Oxford - Smith School of Enterprise and the Environment

Daniel J. Tulloch

University of Oxford - Smith School of Enterprise and the Environment

Géraldine Bouveret

Rimm Sustainability - Climate Risks Research Department

Alex Pfeiffer

University of Oxford - Smith School of Enterprise and the Environment

Lucas Kruitwagen

University of Oxford - Smith School of Enterprise and the Environment

Jeremy McDaniels

University of Oxford - Smith School of Enterprise and the Environment

Gerard Dericks

University of Oxford - Smith School of Enterprise and the Environment

Date Written: August 11, 2017

Abstract

Between 2005 and 2008 EU utilities were determined to embark on a major coal-plant construction programme. They announced plans to build 49 GW of new coal-fired power capacity, about 6.3% of total EU installed generating capacity. The majority of proposed coal plants were located in Germany (>20 GW), the United Kingdom (>7 GW), the Netherlands (>4 GW), and Poland (>3 GW).

Yet post-2008, only 10.5 GW of this planned capacity became operational, 37.8 GW (77%) was cancelled, and there remains 1.1 GW still in planning unlikely to ever be built. The capacity that was built has suffered from significant write-downs (see figures below) and has weighed down the balance sheets of conventional utilities, contributing to the sector’s general malaise and financial underperformance. The significant financial, human, and organisational capital wasted taking forward so many coal projects through the development process was also a major distraction for utilities just as the European power system entered an unprecedented period of technology, policy and market innovation.

There are a number of important questions that stem from this: why did the majority of plant proposals not go ahead; what makes the projects that did proceed different; what challenges are these new plants likely to face now and in the future; and to what extent are the projects that did succeed likely to become stranded generation assets? The results are relevant not just to understanding the fate of the remaining coal-fired power stations in Europe, but also the future of those currently planned or being built in other countries. This working paper examines each of these questions in turn.

Keywords: Stranded Assets, Thermal Coal, Risk Exposure, Europe, Energy Policy

JEL Classification: L94, Q13, Q2, Q3, Q4, Q43, N75

Suggested Citation

Caldecott, Ben and Tulloch, Daniel James and Bouveret, Géraldine and Pfeiffer, Alex and Kruitwagen, Lucas and McDaniels, Jeremy and Dericks, Gerard, The Fate of European Coal-Fired Power Stations Planned in the Mid-2000s: Insights for Policymakers, Companies, and Investors Considering New Coal (August 11, 2017). Sustainable Finance Programme – Working Paper – August 2017, Available at SSRN: https://ssrn.com/abstract=3019030 or http://dx.doi.org/10.2139/ssrn.3019030

Ben Caldecott

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Daniel James Tulloch (Contact Author)

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom
1865614934 (Phone)

Géraldine Bouveret

Rimm Sustainability - Climate Risks Research Department ( email )

Singapore

Alex Pfeiffer

University of Oxford - Smith School of Enterprise and the Environment

United Kingdom

Lucas Kruitwagen

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Jeremy McDaniels

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Gerard Dericks

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

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