ASEAN Countries Do Not Yet Have a “Young” Coal Power Plant Problem [Op-Ed]

To limit the global temperature increase to below 1.5°C, it is essential to phase out coal power generation, as highlighted by the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA). The recommended pathway suggests that developed countries should phase out coal power by 2030, while developing countries should do so by 2040, aligning this transition with historic responsibility.

Developed countries built coal power plants decades ago, so most of their coal power fleets are now old enough to retire. In contrast, Southeast Asian countries have relatively newer coal power plants. The common belief is that because these plants are newer, the cost of building them has yet to be recouped, meaning they need to run for extended periods until the investment is recovered or until it becomes financially feasible to retire or transition them to renewable energy.

Some studies argue that the IEA’s 1.5°C pathway does not account for the realities and challenges of ASEAN member countries, suggesting a staggered approach. Instead of a coal phase-out, these studies recommend a coal phase-down. They propose repowering young coal plants with carbon capture and storage or co-firing coal with biomass and ammonia.

However, these methods do not contribute to the primary goal of reducing carbon emissions. Moreover, they are based on the misconception that coal power plants will still be “young” in 2040. In reality, coal power plants in Southeast Asian countries will be old enough by 2040 to profitably transition to renewable energy.

A recent study by Global Energy Monitor (GEM) shows that by the 2040s, the average age of a coal power plant in Southeast Asia will be about 28 years. This figure varies by country; for example, the average age of a coal plant in Thailand will be 39 years, in Indonesia 27 years, and in the Philippines 28 years.

GEM estimates that by 2040, fewer than 20 GW of the current operational coal power capacity (115 GW) will be under 20 years old, and less than 10 GW will be younger than 16 years. If ASEAN countries were to stop building new coal power plants today, none of their coal plants would be below 15 years old by 2040.

This is significant because recent studies suggest that coal plants as young as 15 years old can be profitably transitioned to renewable energy under the right policy conditions. 

A report by Paul Jacobson provides evidence that coal plants 15 years old or older could be profitably retired as early as 2030-2035 with the appropriate policy and financing framework. Jacobson argues that this requires developing and structuring a phase-out plan, replacing private coal power purchase agreements (PPAs) with new renewable energy PPAs. His analysis indicates that the costs of such a transition (including coal phase-out, new renewable energy construction, storage capacity development and grid upgrades) would not increase wholesale power prices, provided the policy and other conditions are favourable. Under the right conditions, up to 800 units—many located in Southeast Asia—could make this switch.

The energy transition from coal to clean energy in Southeast Asia is still feasible, but this could change if the region adds new coal capacity. ASEAN countries currently have close to 30 GW of coal capacity in various stages of development. Adding this new capacity in the coming years will lower the average age of coal power plants in the region and make the transition from coal to clean energy even more challenging. While private finance may be willing to invest in ASEAN’s coal-to-clean transition under the right conditions, newer coal plants pose a higher investment risk.

Hozefa Merchant is an energy analyst with over 14 years of work experience in climate and energy communications. He consults with various organisations on energy trends and media interventions. Based in Houston, his main area of focus is the coal-to-clean energy transition, and in the past, he has also worked on safety policy and regulations on nuclear energy.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Energy Tracker Asia.