REPORT
Business Risks of New Coal-fired Power Plant Projects in Japan
—The Decline in Capacity Factor and Its Effect on the Business Feasibility
20 July 2017

Renewable Energy Institute today released the report “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 transition 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.

Download 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)

The full report in English will be available in end of August.
View full report in Japanese

<Table of Contents>
Introduction
1. Status of electricity supply and demand since 2011
  1.1 Promotion of energy efficiency and decrease in electricity demand
  1.2 Drastic change of the status of electricity supply

2. The 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 Verification of assumptions in the 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 Effect on the business feasibility of new coal-fired power facilities
  3.4 Companies faced with revisions of plans for new coal-fired power plants

4. Corporate trends and policy developments that affect future investment in coal-fired power plants
  4.1 Reducing dependency on coal among power consuming companies and movements toward de-carbonized economy
  4.2 Government’s efforts for greenhouse gas reduction

Conclusion

<Related report>
Coal Business and Policy Trends —What Japanese Investors should know after the Paris Agreement—
(Released in October 2016)
http://www.renewable-ei.org/en/activities/reports_20161018.php


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