Japan could be left with $71 billion (£58.2bn) of stranded assets unless it reforms its “pro-coal” stance and policies.
That’s the warning from Carbon Tracker, which has calculated the economic viability of new and existing coal power in the Asian nation could be severely undermined by cheap renewables, rendering capital investments useless and significantly reducing operating cashflows.
In collaboration with the University of Tokyo Institute for Future Initiatives and CDP, it found it will be cheaper for Japan to build new offshore wind than run coal plants by 2025.
In terms of the levelised cost of energy (LCOE), it predicts onshore wind, offshore wind and utility-scale solar farms could provide electricity at a cheaper than coal by 2025, 2022 and 2023 respectively.
Looking slightly further to the future, Carbon Tracker expects the long-run marginal cost (LRMC) of coal could exceed that of offshore wind and solar by 2025 and onshore wind by 2027.
Of the $71 billion (£58.2bn) Carbon Tracker suggests is at risk, it believes $29 billion (£23.8bn) could be avoided if the development of planned and under-construction capacity is cancelled with immediate effect.
Head of Power & Utilities at Carbon Tracker and Co-Author of the report, Matt Gray, said: “There’s a technology revolution coursing through the world’s power markets. This revolution is coming to Japan, which means the government urgently needs to reconsider its pro-coal stance.”
“Despite policy signals from the Japanese government, it is still investing heavily in coal. This capacity will become stranded which will likely result in higher energy costs for the consumer.”