Liquidity constraints and lack of sales are driving coal mines and power plants to scale down or halt operations, which will significantly impact the sector’s growth outlook.
“[Coal-based] power plants are being forced to scale down operations and technologies with the lowest cost of electricity generation being given priority to dispatch electricity to the grid,” cites a recent report by UK-headquartered GlobalData.
The report cites the UK and India, which have halted coal-based power generating units in the wake of a collapse in electricity demand due to the Covid-19 pandemic.
The UK is understood to have halted all but four of its coal-based power generating units.
“The collapse in demand for electricity during the lockdown combined with a greater supply of solar power has led to the UK not using coal-fired power plants for generating electricity for more than 20 days,” the report said.
Reduced demand has also led India to halt around 40 coal-based power units with a capacity of 30GW.
Developing countries such as China, India and Vietnam, where a significant portion of the installed generation capacity is coal-based, are expected to witness a decline in electricity generation from coal.
While coal consumption in developed markets has already been low, the ongoing drop in electricity demand combined with the drop in gas prices could further accelerate the closure of coal-based generation plants, according to Somik Das, senior power analyst at GlobalData.
In the Middle East and North Africa region, several planned coal power plants, including those in Egypt and Oman, have been put on hold.
A 2,400MW clean coal-fired power plant is under construction in Dubai. State utility Dubai Electricity & Water Authority (Dewa) and the developer team reached financial close for the $3.4bn project in 2017. A 1,200MW next phase is currently planned.
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