Business Risks of New Coal-fired Power Plant Projects in Japan
—The Decline in Capacity Factor and Its Effect on the Business Feasibility
Since the adoption and enforcement of the Paris Agreement, a movement to withdraw from the coal business has been growing in the world, with the aim of transitioning to de-carbonized economy. In Japan, however, construction of 42 new coal-fired power plants are planned.
This report examines the current status and future outlook for electricity supply and demand, and clarifies the business risks of new coal-fired power plant projects. The report points out that the capacity factor of coal-fired power plants, which is now 80%, could be significantly declined to as low as 56% by FY 2026 if the new coal-fired power plant projects are realized, and this value could be less than 50% if 5% reduction of electricity demand is achieved by energy savings and efficiency.
There is a growing trend among Japanese companies to include transition to de-carbonized economy in their business strategies and expand the utilization of renewable energy. Now that companies are encouraged to clearly disclose information related to climate change, appropriate decisions on investments and loans are necessary particularly for all companies and financial institutions involved with coal business. We expect that this report will trigger active discussions on these issues.
- Summary of Business Risks of New Coal-fired Power Plant Projects in Japan —The Decline in Capacity Factor and Its Effect on the Business Feasibility (0.1MB)
View original full report in Japanese (Published in July 2017)
＜Table of Contents＞
- 1. Status of electricity supply and demand since 2011
- 1.1 Improved energy efficiency and decrease in electricity demand
- 1.2 Drastic change of the status of electricity supply
- 2. Outlook for the future electricity supply and demand
- 2.1 Outlook for electricity demand
- 2.2 Outlook for electricity supply
- 3. The decline in capacity factor of coal-fired power plants and its effect on the business feasibility
- 3.1 Assumption in the Electricity Supply Plan ― Factors to influence the capacity factor of coal-fired power plants
- 3.2 Estimation of the capacity factor of coal-fired power plants in the future
- 3.3 Impact of thermal power facility expansion on the feasibility
- 3.4 Companies faced with revisions of new coal-fired power plant projects
- 4. Corporate trends and policy developments that affect future investment in coal-fired power plants
- 4.1 Departure of electricity-user companies from coal and movements toward de-carbonized economy
- 4.2 Government’s efforts for greenhouse gas reduction
Coal Business and Policy Trends —What Japanese Investors should know after the Paris Agreement—
(Japanese only, Released in October 2016)