Three Dutch coal plants opened in 2015 are losing billions of euros in value and threatened with early closure.
The utilities behind them failed to foresee a rapid rise in renewable power generation, falling demand and calls for a coal phase-out to meet climate goals.
It was a costly error that countries like Turkey, Japan, South Korea and Poland should learn from, according to a report from the Institute for Energy Economics and Financial Analysis (IEEFA).
“The Netherlands case shows how policy and markets no longer support new coal-fired power plants,” the report said.
“The Dutch mistake tells utilities and investors to think twice about investing new coal-fired power plants. And it tells investors not to rely on the orthodox energy outlook of utilities.”
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The trio of power stations, built by RWE, Engie and Uniper (a spinoff of Eon), are some of the most efficient in Europe. But their timing could not have been worse.
Surging wind and solar installations since the start of the decade, coupled with weak demand, have depressed wholesale power prices across Europe, hitting conventional generators hard.
In 2013, the report documents, RWE wrote down the value of its Dutch coal and gas portfolio by €2.3 billion. That same year, Engie took a €1.7bn hit to Dutch thermal power plants.
Then came a shock court ruling in favour of campaign group Urgenda, forcing the Dutch government to tighten its greenhouse gas emissions target for 2020.
It intensified a debate about exiting coal, one of the cheapest ways to reduce emissions – provided the plant owners are not too greedy for compensation.
Uniper cited the prospect of mandatory early closures in its first half results for 2016, writing down its coal plants in the Netherlands, France and Germany by €1.8bn.
Report: Netherlands accounting fudge reduces 2020 carbon cuts
A carbon accounting change in September relieved some of the pressure on government to find quick emissions cuts. Still, it was swiftly followed by a parliamentary vote calling for a tough 55% emissions reduction on 1990 levels by 2030, with a timetable for ending unabated coal use.
The government was due to set out its strategy for rising to the climate challenge in late November. It may look to burning wood fuel or capturing CO2 emissions and pumping them under the North Sea as alternatives to shuttering the plants.
That could give a shot in the arm to the long-delayed €500m ROAD carbon capture and storage project attached to the Maasvlakte 3 plant in Rotterdam. Allard Castelein, chief executive of the Port of Rotterdam Authority, told Reuters in July he expected a final investment decision by the end of the year.
“Regardless of if or when these plant are retired, the mere prospect of their closing just a year after opening is a vivid demonstration of the extreme risk in building coal-fired power plants today,” the IEEFA analysis warned.
Many developed countries are moving away from coal, with Canada and Finland the latest to announce 2030 end dates.
But there are still some OECD members with major coal fleets in the pipeline: Turkey (74GW), Japan (22GW), South Korea (20GW) and Poland (9GW).
While Turkey may be able to count on a growing population to create a market for power expansion, the report said Japan was facing similar trends to the Netherlands.