The Fate of European Coal-Fired Power Stations Planned in the Mid-2000s : Insights for Policymakers, Companies, and Investors Considering New Coal

Between 2005 and 2008 EU utilities were determined to embark on a major coal-plant construction programme. They announced plans to build 49 GW of new coal-fired power capacity, about 6.3% of total EU installed generating capacity. The majority of proposed coal plants were located in Germany (>20 GW), the United Kingdom (>7 GW), the Netherlands (>4 GW), and Poland (>3 GW). Yet post-2008, only 10.5 GW of this planned capacity became operational, 37.8 GW (77%) was cancelled, and there remains 1.1 GW still in planning unlikely to ever be built. The capacity that was built has suffered from significant write-downs (see figures below) and has weighed down the balance sheets of conventional utilities, contributing to the sector's general malaise and financial underperformance. The significant financial, human, and organisational capital wasted taking forward so many coal projects through the development process was also a major distraction for utilities just as the European power system entered an unprecedented period of technology, policy and market innovation.There are a number of important questions that stem from this: why did the majority of plant proposals not go ahead; what makes the projects that did proceed different; what challenges are these new plants likely to face now and in the future; and to what extent are the projects that did succeed likely to become stranded generation assets? The results are relevant not just to understanding the fate of the remaining coal-fired power stations in Europe, but also the future of those currently planned or being built in other countries. This working paper examines each of these questions in turn