November 30, 2016 Read More →

Three Coal Plants In Netherlands Prime Example Of Potential For Stranded Assets

Joshua Hill for Clean Technica:

A new report published this week has shown how three coal power plants brought online in 2015 in the Netherlands have already begun to underperform, and have subsequently shown themselves to be at high risk of becoming stranded assets for investors.

According to the Institute for Energy Economics and Financial Analysis (IEEFA), which published its report this week entitled “The Dutch Coal Mistake: How Three Brand-New Power Plants in the Netherlands Are at Risk Already of Becoming Stranded Assets,” three coal-fired power plants brought online in 2015 are already proving to be far less valuable than was anticipated, and have already come up short financially. According to the IEEFA, the introduction of these new plants “are fundamentally out of step with electricity-market trends across Europe” given that “markets and existing laws have already undermined the viability of new coal-fired plants in Europe.”

ieefa-1The three power plants in question are run by three major European utilities — RWE (at Eemshaven), Uniper (at Maasvlakte) and Engie (at Rotterdam). Since going online, the report shows that these plants have a current collective valuation, on owner balance sheets, of approximately €2.5 billion, which is not great considering the collective original construction costs amounted to more than €6 billion.

The author of the report, Gerard Wynn, a London-based IEEFA energy finance consultant, explains that the three power plants’ underperformance is the result of numerous market trends, including falling power prices, the rapid growth of renewable energy, flat or falling energy demand, and new emissions-control policies.

“These will very likely be the last coal-fired power plants built in Western Europe,” Wynn suggested. “Our research finds these plants are classic ‘bad examples’ of energy investment due to their failure to compete and their vulnerability in particular to climate-change risk and the rise of renewables.”

Three Coal Plants In Netherlands Prime Example Of Potential For Stranded Assets

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