$60b of coal assets could get stranded in Southeast Asia due to renewables

This puts the $120b total investment by Indonesia, the Philippines, and Vietnam in coal at risk.

As much as $60b of coal assets could be stranded in the next decade across Vietnam, Indonesia, and the Philippines due to tighter environmental policies and competition from cheaper renewable energy, financial advocacy group Carbon Tracker revealed.

According to their study, new wind and solar plants may become cheaper than coal in those countries, which are planning a combined $120b in coal investments by the end of next decade.

Against Indonesia’s $50b of coal capacity under construction or planned, as much as $34.7b of assets risk getting stranded. Against the Philippines’ $30b total investment, about $13.1b of assets are at risk.

Meanwhile, Vietnam currently has $40b of coal capacity under construction and planned, and as much as $11.7b of assets could get stranded.

Moreover, the companies most at risk from stranded assets are PT PLN Persero (Indonesia) with $15b, San Miguel Corporation (Philippines) with $3.3b, and EVN (Vietnam) with $6.1b.

Southeast Asia is still highly dependent on coal. From 2010-2017, coal generation increased 72% in Vietnam, over 50% in the Philippines, and 53% in Indonesia. However, Carbon Tracker said new solar plants may become less costly than operating existing coal projects by 2027 in Vietnam, 2028 in Indonesia, and 2029 in the Philippines.

Due to the rapidly declining cost of renewable energy, the average coal unit in these nations will be retired at just 15 years old, far earlier than forty-year assumptions often associated with coal plant lifetimes, it added.

Carbon Tracker head of power and utilities Matt Gray commented, “Thanks to the dramatic fall in the cost of renewable energy, phasing-out coal power by 2040 will likely prove to be the lowest cost option for these Southeast Asian nations. Policymakers should act now, to avoid stranded coal assets as the rapid pace of the energy transition becomes increasingly apparent to investors.”