Coal power tipped to decline in APAC in 2020

Low electricity demand hit coal-fired generation in India and Southeast Asia.

A decline in coal-fired power generation is expected in countries across Asia Pacific in 2020, according to a report from the International Energy Agency (IEA).

Notably, China’s coal generation is expected to be hit hard, as the power system is crowded by low variable cost hydro, wind, solar and nuclear power. “If a more favourable dispatch for coal power plants is established, this could offer some relief for coal power producers,” the report noted.

With this, coal demand in the country, where more than half of the world’s coal is consumed, is projected to decline 5% in 2020 despite gradual recovery observed since the February lockdown. Still, the government’s pledge to implement an economic stimulus might play a role in coal demand in 2020.

“The magnitude and design of that stimulus – as well as how energy-, electricity- and coal-intensive it is – might change coal use trends significantly in China and therefore in the world,” it added.

In India, the economy had yet to recover from last year’s slowdown when the government mandated the lockdown on 24 March. As a result, electricity demand and industrial production fell in late March.

This is also expected to be the case in Southeast Asia, with the fastest growth in coal demand in recent years, where coal power generation is curtailed by lower electricity demand, especially in Malaysia and Thailand.

Globally, coal demand is projected to slip 8% YoY in Q1 and in 2020. For the quarter, this is expected to be driven by lower demand in the electricity sector, with coal power generation falling around 10%.