Southeast Asia’s Coal Plants Set For Renewable Energy Transition By 2040, New Analysis Reveals

A recent analysis by Global Energy Monitor (GEM) has revealed that the average age of coal power plants in Southeast Asia will reach 28 years by 2040, suggesting that these plants could be retired profitably under the right policy conditions before the recommended phase-out deadline for coal.

The report challenges previous assumptions that Southeast Asia’s coal power fleet is too young to be retired. With the average age nearing the current global retirement age of 36 years, the study highlights the region’s capacity to transition away from coal power by 2040, aligning with the goals set by the International Energy Agency (IEA) and Intergovernmental Panel on Climate Change (IPCC) to limit global warming to below 1.5°C.

Christine Shearer, Project Manager of GEM’s Global Coal Plant Tracker, stated, “The notion that Southeast Asian coal plants are too young to retire is a misconception. Our analysis shows that these plants will be old enough to be retired by 2040, making a transition to clean energy not just feasible but necessary.”

The analysis counters earlier conclusions from the ASEAN Center for Energy and the World Bank, which suggested that the region’s coal plants are too new to be retired and should instead be retrofitted with carbon capture and storage (CCS) technology or repurposed for biomass or ammonia use.

GEM’s report underscores the urgency for ASEAN countries to halt the development of new coal power plants and avoid further investments in repowering existing ones. With about 15 gigawatts (GW) of new coal power capacity in pre-construction phases and another 15 GW under construction, the report stresses the importance of cancelling these projects to prevent exacerbating the already challenging situation.

If ASEAN countries stop expanding coal capacity, fewer than 20 GW of existing coal power capacity will be under 20 years of age by 2040, making them suitable for a profitable transition to renewable energy.

Paul Jacobson, author of a recent IEEFA analysis, supports this view, stating, “Coal power plants as young as 15 years old could be retired profitably by 2030-2035 with the right policy and financing framework. This transition could be achieved without increasing wholesale power prices if proper agreements are made to replace coal power purchase agreements with renewable energy contracts.”

The report details the age distribution of coal plants in ASEAN by 2040, noting that 17% will be under 20 years old, 27% will be between 20-24 years, 25% will be 25-29 years, and 32% will be over 30 years old. The analysis suggests that retiring older plants will be economically advantageous as they would have already recouped their investment costs, further supporting the move towards renewable energy sources.

As Southeast Asia faces increasing pressure to reduce carbon emissions and embrace cleaner energy solutions, the report provides a critical perspective on the feasibility of transitioning away from coal power, reinforcing the need for immediate action in the region’s energy strategy.