Early closure of coal plants only has a minor effect on profitability.Īn earlier article offered some qualitative discussions on the risks involved in several mainstream energy options.This effect can be somewhat countered by the value increase caused by expanding wind and solar, but the negative effect of CO 2 taxes on profitability remains large even in this scenario. CO 2 price increases pose a major risk to coal power plants.Wind and solar expansion can improve coal profitability due to the value increase of load-following plants in a system with a high market share of variable renewables.A cumulative cash flow analysis is presented for a coal power plant.The rising demand for load-following plants, set against rising carbon taxes, the threat of early plant closure, and the discount rate all play a part. In his final instalment – after his similarly detailed analyses of onshore wind, utility-scale solar PV, nuclear and natural gas – Schalk Cloete ’s comprehensive sensitivity analyses reveal how and why coal survives in the age of renewables. On top of that, the rapid rise of variable renewables (solar, wind) need something to rise with it to fill the generation gap when the sun doesn’t shine and the wind doesn’t blow.
So why do countries still use them? Coal’s attractiveness comes from the relatively low up front capital investment required to start generating energy. Everyone knows coal plants are bad for the environment.