Global coal-fired generation rebounds in 2021 with continued expansion in some countries
Energize Weekly, July 28, 2021
Global coal-fired electricity generation is making a rebound in 2021 as billions of dollars in government support continue to flow to the sector and new coal-fired plants are being built or planned around the world.
Coal-fired electricity generation, after dropping by 4.6 percent in 2020, will rise nearly 5 percent in 2021, exceeding pre-pandemic levels, according to the International Energy Agency’s (IEA) July Electricity Market Report.
G-20 countries, which represent the world’s largest economies, have 396 gigawatts (GW) of new coal-fired generating capacity either under construction or in the pipeline — equivalent to a quarter of the current global fleet of coal-fired units.
Those countries made $636 billion in direct fossil fuel supports including those for coal, in 2019, only a 10 percent reduction from 2015 levels, according to energy analyst Bloomberg NEF.
“Coal subsidies have risen in recent years, with sizable funding from China, South Africa, Japan and the U.S., among others,” Bloomberg NEF said.
“After a slight drop in global electricity demand in 2020, caused by the COVID-19 pandemic, we expect strong growth in 2021, led by the Asia Pacific region,” the IEA said. “While renewable energy sources are expected to continue to grow rapidly, they will only be able to serve around half of the net demand increase in 2021 and 2022.”
IEA also projects a modest 1 percent increase in natural gas-fired generation in 2021, after a 2 percent decline last year. “Gas growth lags behind coal, as it plays a smaller role in the fast-growing Asia Pacific region, and as it faces increasing competition from renewables in the United States and Europe,” the agency said.
In the European Union, coal generation returned to its pre-pandemic levels in the first quarter of 2021 as nuclear generation was down 1 percent year-on-year and wind power output was down 14 percent.
“The return of coal is likely to be short-lived, as several European countries accelerated their coal phase-out plans. Austria and Sweden shut down their last single-fired coal power plants in 2020,” the IEA said.
Coal generation output hit record lows in China in 2020 but rebounded back in early 2021 as hydropower was reduced in the dry winter period, pushing coal’s share of generation to more than 64 percent of total.
Renewable generation in China, as in the case of hydropower, is seasonal with more generation in the summer, so by May coal generation was down to 61 percent of total energy provided.
Coal-fired generation accounted for even a bigger share of India’s generation reaching a monthly average of 79 percent in early 2021, the highest level since 2019, as hydropower and wind generation lagged.
Coal and renewables generation have both grown more quickly in India than overall generation during the past two years, reducing the shares of nuclear and gas in the mix, the IEA said. “Coal-fired generation grew by 11 percent from the first quarter of 2019 to the first quarter of 2021. Renewable generation increased by 13 percent in the same period.”
China and India led among the G-20 countries in programs for new coal-fired plants with China set to build as much as 247 GW of new coal-fired capacity and India 66 GW.
Among the other countries still pursuing new coal-fired capacity are Indonesia with 33 GW of planned new capacity, Turkey with 20 GW, South Africa with 8 GW, and Japan and South Korean with 7 GW each.
In the U.S., coal won reprieve after natural gas prices hit new highs leading utilities to switch from natural gas-fired plants to coal plants. In July, the natural gas spot price at the Henry Hub reached $3.67 per million British thermal units, the highest since 2014.
“The improved competitiveness of coal led to a sharp rebound coal-fired electricity generation, up by 34 percent year-on-year in the first half of 2021,” equal to about 110 terawatt-hours of electricity, the IEA said, “primarily at the expense of gas-fired power generation, which fell by 9 percent.”
The natural gas share of the generation mix slipped from 44 percent in July 2020 to between 33 percent and 34 percent in 2021, the IEA said.
Meanwhile coal’s share of the total mix rose from a monthly low of 15 percent in April 2020 to a peak of 30 percent in February, when a winter storm and cold wave disrupted natural gas supplies. It has settled at about 20 percent of the generating mix as more renewable electricity came online in the spring.
“After absolute coal-fired generation fell by 34 percent in the first five months of 2020 compared with the same period in 2019, it rose by 36 percent during the same months of 2021 compared with 2020,” the IEA said.
